Tennessee Valley Authority 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TENNESSEE VALLEY AUTHORITY CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended September 30 (in millions) 2025 2024 2023 Operating revenues Revenue from sales of electricity $ 13,486 $ 12,128 $ 11,899 Other revenue 186 186 155 Total operating revenues 13,672 12,314 12,054 Operating expenses Fuel 2,376 2,169 2,549 Purchased power 2,106 1,581 1,633 Operating and maintenance 3,717 3,641 3,372 Depreciation and amortization 2,271 2,138 2,213 Tax equivalents 633 557 593 Total operating expenses 11,103 10,086 10,360 Operating income 2,569 2,228 1,694 Other income, net 92 71 61 Other net periodic benefit cost 105 98 199 Interest expense 1,196 1,066 1,056 Net income $ 1,360 $ 1,135 $ 500 The accompanying notes are an integral part of these consolidated financial statements. 83 Table of Contents TENNESSEE VALLEY AUTHORITY CONSOLIDATED BALANCE SHEETS At September 30 (in millions) ASSETS 2025 2024 Current assets Cash and cash equivalents $ 1,576 $ 502 Accounts receivable, net 2,119 1,801 Inventories, net 1,193 1,155 Regulatory assets 127 191 Other current assets 162 120 Total current assets 5,177 3,769 Property, plant, and equipment Completed plant 71,574 70,989 Less accumulated depreciation ( 38,716 ) ( 38,793 ) Net completed plant 32,858 32,196 Construction in progress 6,760 4,879 Nuclear fuel 1,185 1,261 Finance leases 663 729 Total property, plant, and equipment, net 41,466 39,065 Investment funds 5,573 4,968 Regulatory and other long-term assets Regulatory assets 8,047 9,408 Operating lease assets, net of amortization 113 149 Other long-term assets 506 344 Total regulatory and other long-term assets 8,666 9,901 Total assets $ 60,882 $ 57,703 The accompanying notes are an integral part of these consolidated financial statements. 84 Table of Contents TENNESSEE VALLEY AUTHORITY CONSOLIDATED BALANCE SHEETS At September 30 (in millions) LIABILITIES AND PROPRIETARY CAPITAL 2025 2024 Current liabilities Accounts payable and accrued liabilities $ 3,299 $ 2,910 Accrued interest 348 280 Asset retirement obligations 313 283 Regulatory liabilities 228 174 Short-term debt, net — 1,167 Current maturities of power bonds 1,370 1,022 Current maturities of long-term debt of variable interest entities 49 37 Total current liabilities 5,607 5,873 Other liabilities Post-retirement and post-employment benefit obligations 2,183 2,887 Asset retirement obligations 10,101 10,523 Finance lease liabilities 640 700 Other long-term liabilities 1,606 1,712 Regulatory liabilities 141 83 Total other liabilities 14,671 15,905 Long-term debt, net Long-term power bonds, net 20,461 17,867 Long-term debt of variable interest entities, net 1,632 897 Total long-term debt, net 22,093 18,764 Total liabilities 42,371 40,542 Commitments and contingencies (Note 23) Proprietary capital Power program appropriation investment 258 258 Power program retained earnings 17,797 16,437 Total power program proprietary capital 18,055 16,695 Nonpower programs appropriation investment, net 510 518 Accumulated other comprehensive loss ( 54 ) ( 52 ) Total proprietary capital 18,511 17,161 Total liabilities and proprietary capital $ 60,882 $ 57,703 The accompanying notes are an integral part of these consolidated financial statements. 85 Table of Contents TENNESSEE VALLEY AUTHORITY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the years ended September 30 (in millions) 2025 2024 2023 Net income $ 1,360 $ 1,135 $ 500 Other comprehensive income (loss) 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 Total comprehensive income $ 1,358 $ 1,112 $ 557 The accompanying notes are an integral part of these consolidated financial statements. 86 Table of Contents TENNESSEE VALLEY AUTHORITY CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended September 30 (in millions) 2025 2024 2023 Cash flows from operating activities Net income $ 1,360 $ 1,135 $ 500 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization (1) 2,293 2,160 2,235 Amortization of nuclear fuel cost 308 364 371 Non-cash retirement benefit expense 148 138 241 Other regulatory amortization and deferrals 63 ( 71 ) 31 Changes in current assets and liabilities Accounts receivable, net ( 209 ) ( 16 ) 301 Inventories and other current assets, net ( 56 ) ( 70 ) ( 83 ) Accounts payable and accrued liabilities 61 44 ( 1 ) Accrued interest 67 8 ( 1 ) Pension contributions ( 310 ) ( 304 ) ( 306 ) Settlements of asset retirement obligations ( 258 ) ( 283 ) ( 327 ) Other, net ( 143 ) ( 102 ) ( 89 ) Net cash provided by operating activities 3,324 3,003 2,872 Cash flows from investing activities Construction expenditures ( 4,457 ) ( 3,281 ) ( 2,526 ) Nuclear fuel expenditures ( 224 ) ( 294 ) ( 273 ) Acquisition of leasehold interests in combustion turbine assets — — ( 155 ) Purchases of investments ( 48 ) ( 52 ) ( 51 ) Loans and other receivables Advances — ( 4 ) ( 7 ) Repayments 12 6 8 Other, net 56 34 10 Net cash used in investing activities ( 4,661 ) ( 3,591 ) ( 2,994 ) Cash flows from financing activities Long-term debt 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 ) Redemptions of debt of variable interest entities ( 41 ) ( 35 ) ( 39 ) Short-term debt issues (redemptions), net ( 1,166 ) 734 ( 740 ) Payments on leases and leasebacks ( 82 ) ( 76 ) ( 56 ) Financing costs, net ( 30 ) ( 5 ) ( 4 ) Other, net ( 15 ) 3 ( 1 ) Net cash provided by financing activities 2,411 590 123 Net change in cash, cash equivalents, and restricted cash 1,074 2 1 Cash, cash equivalents, and restricted cash at beginning of year 523 521 520 Cash, cash equivalents, and restricted cash at end of year $ 1,597 $ 523 $ 521 Note (1) Including amortization of debt issuance costs and premiums/discounts. The accompanying notes are an integral part of these consolidated financial statements. 87 Table of Contents TENNESSEE VALLEY AUTHORITY CONSOLIDATED STATEMENTS OF CHANGES IN PROPRIETARY CAPITAL For the years ended September 30 (in millions) Power Program Appropriation Investment Power Program Retained Earnings Nonpower Programs Appropriation Investment, Net Accumulated Other Comprehensive Loss Total Balance at September 30, 2022 $ 258 $ 14,800 $ 533 $ ( 86 ) $ 15,505 Net income (loss) — 508 ( 8 ) — 500 Total other comprehensive income — — — 57 57 Return on power program appropriation investment — ( 6 ) — — ( 6 ) Balance at September 30, 2023 $ 258 $ 15,302 $ 525 $ ( 29 ) $ 16,056 Net income (loss) — 1,142 ( 7 ) — 1,135 Total other comprehensive (loss) — — — ( 23 ) ( 23 ) Return on power program appropriation investment — ( 7 ) — — ( 7 ) Balance at September 30, 2024 $ 258 $ 16,437 $ 518 $ ( 52 ) $ 17,161 Net income (loss) — 1,368 ( 8 ) — 1,360 Total other comprehensive (loss) — — — ( 2 ) ( 2 ) Return on power program appropriation investment — ( 8 ) — — ( 8 ) Balance at September 30, 2025 $ 258 $ 17,797 $ 510 $ ( 54 ) $ 18,511 The accompanying notes are an integral part of these consolidated financial statements. 88 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions except where noted) Note Page No. 1 Summary of Significant Accounting Policies 89 2 Impact of New Accounting Standards and Interpretations 95 3 Restructuring 96 4 Accounts Receivable, Net 97 5 Inventories, Net 97 6 Other Current Assets 98 7 Net Completed Plant 98 8 Plant Closures 98 9 Leases 99 10 Other Long-Term Assets 102 11 Regulatory Assets and Liabilities 104 12 Variable Interest Entities 106 13 Other Long-Term Liabilities 109 14 Asset Retirement Obligations 110 15 Debt and Other Obligations 112 16 Risk Management Activities and Derivative Transactions 116 17 Fair Value Measurements 122 18 Revenue 128 19 Other Income, Net 130 20 Supplemental Cash Flow Information 131 21 Benefit Plans 131 22 Collaborative Arrangement 144 23 Commitments and Contingencies 144 24 Related Parties 148 25 Segment Reporting 149 1. Summary of Significant Accounting Policies General The Tennessee Valley Authority ("TVA") is a corporate agency and instrumentality of the United States ("U.S.") that was created in 1933 by federal legislation in response to a proposal by President Franklin D. Roosevelt. TVA was created to, among other things, improve navigation on the Tennessee River, reduce the damage from destructive flood waters within the Tennessee River system and downstream on the lower Ohio and Mississippi Rivers, further the economic development of TVA's service area in the southeastern U.S., and sell the electricity generated at the facilities TVA operates. Today, TVA operates the nation's largest public power system and supplies power in most of Tennessee, northern Alabama, northeastern Mississippi, and southwestern Kentucky and in portions of northern Georgia, western North Carolina, and southwestern Virginia to a population of approximately 10 million people. TVA also manages the Tennessee River, its tributaries, and certain shorelines to provide, among other things, year-round navigation, flood damage reduction, and affordable and reliable electricity. Consistent with these primary purposes, TVA also manages the river system and public lands to provide recreational opportunities, adequate water supply, improved water quality, cultural and natural resource protection, and economic development. TVA performs these management duties in cooperation with other federal and state agencies that have jurisdiction and authority over certain aspects of the river system. In addition, the TVA Board of Directors ("TVA Board") has established two councils — the Regional Resource Stewardship Council and the Regional Energy Resource Council — to advise TVA on its stewardship activities in the Tennessee Valley and its energy resource activities. The power program has historically been separate and distinct from the stewardship programs. It is required to be self-supporting from power revenues and proceeds from power financings, such as proceeds from the issuance of bonds, notes, or other evidences of indebtedness (collectively, "Bonds"). Although TVA does not currently receive Congressional appropriations, it is required to make annual payments to the United States Department of the Treasury ("U.S. Treasury") as a return on the government's appropriation investment in TVA's power facilities (the "Power Program Appropriation Investment"). In the 1998 89 Table of Contents 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. Consequently, during 2000, TVA began paying for essential stewardship activities primarily with power revenues, with the remainder funded with user fees and other forms of revenues derived in connection with those activities. The activities related to stewardship properties do not meet the criteria of an operating segment under accounting principles generally accepted in the United States of America ("GAAP"). Accordingly, these assets and properties are included as part of the power program, TVA's only operating segment. Power rates are established by the TVA Board as authorized by the Tennessee Valley Authority Act of 1933, as amended ("TVA Act"). The TVA Act requires TVA to charge rates for power that will produce gross revenues sufficient to provide funds for operation, maintenance, and administration of its power system; payments to states and counties in lieu of taxes ("tax equivalents"); debt service on outstanding indebtedness; payments to the U.S. Treasury in repayment of and as a return on the Power Program Appropriation Investment; and such additional margin as the TVA Board may consider desirable for investment in power system assets, retirement of outstanding Bonds in advance of maturity, additional reduction of the Power Program Appropriation Investment, and other purposes connected with TVA's power business. TVA fulfilled its requirement to repay $ 1.0 billion of the Power Program Appropriation Investment with the 2014 payment; therefore, this repayment obligation is no longer a component of rate setting. In setting TVA's rates, the TVA Board is charged by the TVA Act to have due regard for the primary objectives of the TVA Act, including the objective that power shall be sold at rates as low as are feasible. Rates set by the TVA Board are not subject to review or approval by any state or other federal regulatory body. Fiscal Year TVA's fiscal year ends September 30. Years (2025, 2024, etc.) refer to TVA's fiscal years unless they are preceded by "CY," in which case the references are to calendar years. Cost-Based Regulation Since the TVA Board is authorized by the TVA Act to set rates for power sold to its customers, TVA is self-regulated. Additionally, TVA's regulated rates are designed to recover its costs. Based on current projections, TVA believes that rates, set at levels that will recover TVA's costs, can be charged and collected. As a result of these factors, TVA records certain assets and liabilities that result from the regulated ratemaking process that would not be recorded under GAAP for non-regulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities generally represent obligations to make refunds to customers for previous collections for costs that are not likely to be incurred or deferral of gains that will be credited to customers in future periods. TVA assesses whether the regulatory assets are probable of future recovery by considering factors such as applicable regulatory changes, potential legislation, and changes in technology. Based on these assessments, TVA believes the existing regulatory assets are probable of recovery. This determination reflects the current regulatory and political environment and is subject to change in the future. If future recovery of regulatory assets ceases to be probable, or TVA is no longer considered to be a regulated entity, then costs would be required to be written off. All regulatory asset write offs would be required to be recognized in earnings in the period in which future recovery ceases to be probable or in which TVA is no longer considered to be a regulated entity. Basis of Presentation The accompanying consolidated financial statements, which have been prepared in accordance with GAAP, include the accounts of TVA and variable interest entities ("VIEs") of which TVA is the primary beneficiary. See Note 12 — Variable Interest Entities . Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements requires TVA to estimate the effects of various matters that are inherently uncertain as of the date of the consolidated financial statements. Although the consolidated financial statements are prepared in conformity with GAAP, TVA is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses reported during the reporting period. Each of these estimates varies in regard to the level of judgment involved and its potential impact on TVA's financial results. Estimates are considered critical either when a different estimate could have reasonably been used, or where changes in the estimate are reasonably likely to occur from period to period, and such use or change would materially impact TVA's financial condition, results of operations, or cash flows. Cash, Cash Equivalents, and Restricted Cash Cash includes cash on hand, non-interest bearing cash, and deposit accounts. 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 90 Table of Contents 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 . The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Consolidated Balance Sheets and Consolidated Statements of Cash Flows: Cash, Cash Equivalents, and Restricted Cash At September 30 (in millions) 2025 2024 Cash and cash equivalents $ 1,576 $ 502 Restricted cash and cash equivalents included in Other long-term assets 21 21 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/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. 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. TVA's corporate credit department also performs an assessment of the financial condition of customers and the credit quality of the receivables. 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. In situations where a loan exhibits unique risk characteristics and is no longer expected to experience similar risks to the rest of its pool, the loan will be evaluated separately. TVA derives an annual loss rate based on historical loss and then adjusts the rate to reflect TVA's consideration of available information on current conditions and reasonable and supportable future forecasts. This information may include economic and business conditions, default trends, and other internal and external factors. 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 $ 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 receivable are reported net of allowances for uncollectible accounts of $ 2 million at both September 30, 2025 and 2024. Revenues 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. For the generation and transmission of electricity, this is generally at the time the power is delivered to a metered customer delivery point for the customer's consumption or distribution. As a result, revenues from power sales are recorded as electricity is delivered to customers. In addition to power sales invoiced and recorded during the month, TVA accrues estimated unbilled revenues for power sales provided to five customers whose billing date occurs prior to the end of the month. Exchange power sales are presented in the accompanying Consolidated Statements of Operations as a component of sales of electricity. Exchange power sales are sales of excess power after meeting TVA native load and directly served requirements. 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 91 Table of Contents 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. Revenues that are not related to the overall mission are recorded in Other income, net. Inventories Certain Fuel, Materials, and Supplies . Materials and supplies inventories are valued using an average unit cost method. A new average cost is computed after each inventory purchase transaction, and inventory issuances are priced at the latest moving weighted average unit cost. Coal, fuel oil, and natural gas inventories are valued using an average cost method. A new weighted average cost is computed monthly, and monthly issues are priced accordingly. Renewable Energy Certificates. TVA accounts for Renewable Energy Certificates ("RECs") using the specific identification cost method. RECs that are acquired through power purchases are recorded as inventory and charged to purchased power expense when the RECs are subsequently used or sold. TVA assigns a value to the RECs at the inception of the power purchase arrangement using a relative standalone selling price approach. RECs created through TVA-owned asset generation are recorded at zero cost. Emission Allowances . TVA accounts for emission allowances using the specific identification cost method. Allowances that are acquired through third party purchases are recorded as inventory at cost and charged to operating expense based on tons emitted during the respective compliance periods. Allowance for Inventory Obsolescence . TVA reviews materials and supplies inventories by category and usage on a periodic basis. Each category is assigned a probability of becoming obsolete based on the type of material and historical usage data. TVA has a fleet-wide inventory management policy for each generation type. Based on the estimated value of the inventory, TVA adjusts its allowance for inventory obsolescence. Pre-Commercial Plant Operations As part of the process of completing the construction of a generating unit, the electricity produced is used to serve the demands of the electric system. 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 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. 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 Property, Plant, and Equipment. Additions to plant are recorded at cost, which includes direct and indirect costs. The cost of current repairs and minor replacements is charged to operating expense. When property, plant, and equipment is retired, accumulated depreciation is charged for the original cost of the assets. Gains or losses are only recognized upon the sale of land or an entire operating unit. TVA capitalizes certain costs incurred in connection with developing or obtaining internal-use software. Capitalized software costs are included in Property, plant, and equipment on the Consolidated Balance Sheets and are generally amortized over seven years . Nuclear Fuel. Nuclear fuel, which is included in Property, plant, and equipment, is valued using the average cost method for raw materials and the specific identification method for nuclear fuel in a reactor. Amortization of nuclear fuel in a reactor is calculated on a units-of-production basis and is included in fuel expense. 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. At September 30, 2025, TVA recorded $ 6 million in Accounts receivable, net related to this agreement. Depreciation. TVA accounts for depreciation of its properties using the composite depreciation convention of accounting. Under the composite method, assets with similar economic characteristics are grouped and depreciated as one asset. 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 92 Table of Contents 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. Depreciation expense for the years ended September 30, 2025, 2024, and 2023 was $ 1.9 billion, $ 1.8 billion, and $ 1.9 billion, respectively. Depreciation expense expressed as a percentage of the average annual depreciable completed plant was 3.04 percent for 2025, 2.92 percent for 2024, and 3.14 percent for 2023. Average depreciation rates by asset class are as follows: Property, Plant, and Equipment Depreciation Rates At September 30 (percent) 2025 2024 2023 Asset Class Nuclear 2.71 2.71 2.73 Coal-fired (1) 4.82 4.13 4.98 Hydroelectric 1.82 1.83 1.82 Gas and oil-fired 3.16 3.31 3.17 Transmission 1.55 1.52 1.52 Other 5.22 4.98 4.43 Note (1) The rates include the acceleration of depreciation related to retiring certain coal-fired units and potentially retiring the remainder of the coal-fired fleet by 2035. See Note 8 — Plant Closures . 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. 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. 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. Amortization expense was $ 11 million, $ 11 million, and $ 10 million for the years ended September 30, 2025, 2024, and 2023, respectively, and accumulated amortization at September 30, 2025 and 2024 totaled $ 74 million and $ 63 million, respectively. At September 30, 2025, the estimated aggregate amortization expense for each of the next five years and thereafter is shown below: 2026 2027 2028 2029 2030 Thereafter Reacquired Rights $ 11 $ 12 $ 11 $ 11 $ 12 $ 244 Impairment of Assets. TVA evaluates long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. For long-lived assets, TVA bases its evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, regulatory approval and ability to set rates at levels that allow for recoverability of the assets, and other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset may not be recoverable, TVA determines whether an impairment has occurred based on an estimate of undiscounted cash flows attributable to the asset as compared with the carrying value of the asset. If an impairment has occurred, the amount of the impairment recognized is measured as the excess of the asset's carrying value over its fair value. Additionally, TVA regularly evaluates construction projects. If the project is canceled or deemed to have no future economic benefit, the project is written off as an asset impairment or, upon TVA Board approval, reclassified as a regulatory asset and amortized over the Board-approved period. See Note 8 — Plant Closures . Leases TVA recognizes a lease asset and lease liability for leases with terms of greater than 12 months. Lease assets represent TVA's right to use an underlying asset for the lease term, and lease liabilities represent TVA's obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. TVA has certain lease agreements that include variable lease payments that are based on energy production levels. These variable lease payments are not included in the measurement of the lease assets or lease liabilities but are recognized in the period in which the expenses are incurred. 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 93 Table of Contents 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. The total lease obligations included in Accounts payable and accrued liabilities, Other long-term liabilities, and Finance lease liabilities related to these agreements were $ 550 million and $ 121 million for finance and operating leases, respectively, at September 30, 2024. TVA has agreements with lease and non-lease components and has elected to separate lease and non-lease components. Consideration is allocated to lease and non-lease components generally based on relative standalone price basis. Variable lease costs included in the agreements are allocated based on the determination of lease and non-lease components. TVA has lease agreements which include options for renewal and early termination. The intent to renew a lease varies depending on the lease type and asset. Renewal options that are reasonably certain to be exercised are included in the lease measurements. The decision to terminate a lease early is dependent on various economic factors. No termination options have been included in TVA's lease measurements. Leases with an initial term of 12 months or less, which do not include an option to extend the initial term of the lease to greater than 12 months that TVA is reasonably certain to exercise, are not recorded on the Consolidated Balance Sheets at September 30, 2025. Operating leases are recognized on a straight-line basis over the term of the lease agreement. Rent expense associated with short-term leases and variable leases is recorded in Operating and maintenance expense, Fuel expense, or Purchased power expense on the Consolidated Statements of Operations. Expenses associated with finance leases result in the separate presentation of interest expense on the lease liability and amortization expense of the related lease asset on the Consolidated Statements of Operations. Decommissioning Costs TVA recognizes legal obligations associated with the future retirement of certain tangible long-lived assets. These obligations relate to fossil fuel-fired generating plants, nuclear generating plants, hydroelectric generating plants/dams, transmission structures, and other property-related assets. Activities involved with retiring these assets could include decontamination and demolition of structures, removal and disposal of wastes, and site restoration. Revisions to the forecasted costs of decommissioning activities are made whenever factors indicate that the timing or amounts of estimated cash flows have changed materially. Studies are updated for both nuclear and non-nuclear decommissioning costs at least every five years. Any accretion or depreciation expense related to these liabilities and assets is charged to a regulatory asset. See Note 11 — Regulatory Assets and Liabilities — Nuclear Decommissioning Costs and Non-Nuclear Decommissioning Costs and Note 14 — Asset Retirement Obligations. Investment Funds Investment funds consist primarily of trust funds designated to fund decommissioning requirements (see Note 23 — Commitments and Contingencies — Contingencies — Decommissioning Costs ), the Supplemental Executive Retirement Plan ("SERP") (see Note 21 — Benefit Plans — Overview of Plans and Benefits — Supplemental Executive Retirement Plan ), the Deferred Compensation Plan ("DCP"), and the Restoration Plan ("RP"). The Nuclear Decommissioning Trust ("NDT") holds funds primarily for the ultimate decommissioning of TVA's nuclear power plants. The Asset Retirement Trust ("ART") holds funds primarily for the costs related to the future closure and retirement of TVA's other long-lived assets. 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. The NDT, ART, SERP, DCP, and RP funds are all classified as trading. Research and Development Costs Research and development costs are expensed when incurred. 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 TVA is not subject to federal income taxation. In addition, neither TVA nor its property, franchises, or income is subject to taxation by states or their subdivisions. The TVA Act requires TVA to make payments to states and counties in which TVA conducts its power operations and in which TVA has acquired power properties previously subject to state and local taxation. 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. Fuel cost-related tax equivalent expense is recognized in the same accounting period in which the fuel cost-related revenue is recognized. 94 Table of Contents Maintenance Costs TVA records maintenance costs and repairs related to its property, plant, and equipment on the Consolidated Statements of Operations as they are incurred except for the recording of certain regulatory assets for retirement and removal costs. 2. Impact of New Accounting Standards and Interpretations 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 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 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 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. 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. 95 Table of Contents 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. 3. 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 $ 11 96 Table of Contents 4 . Accounts Receivable, Net Accounts receivable primarily consist of amounts due from customers for power sales. The table below summarizes the types and amounts of TVA's accounts receivable: Accounts Receivable, Net At September 30 (in millions) 2025 2024 Power receivables $ 1,908 $ 1,683 Other receivables 225 118 Allowance for uncollectible accounts (1) (2) ( 14 ) — Accounts receivable, net $ 2,119 $ 1,801 Note (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. 5 . Inventories, Net The table below summarizes the types and amounts of TVA's inventories: Inventories, Net At September 30 (in millions) 2025 2024 Materials and supplies inventory $ 986 $ 931 Fuel inventory 278 286 Renewable energy certificates/emissions allowance inventory, net 12 11 Allowance for inventory obsolescence ( 83 ) ( 73 ) Inventories, net $ 1,193 $ 1,155 97 Table of Contents 6. Other Current Assets Other current assets consisted of the following: Other Current Assets At September 30 (in millions) 2025 2024 (1) Inventory work-in-progress $ 69 $ 41 Prepaid software maintenance 25 22 Prepaid insurance 16 19 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 12 7 Other current assets $ 162 $ 120 Note (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. 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. Commodity contract derivative assets classified as current include deliveries or settlements that will occur within 12 months or less. 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. 7 . Net Completed Plant Net completed plant consisted of the following: Net Completed Plant At September 30 (in millions) 2025 2024 Cost Accumulated Depreciation Net Cost Accumulated Depreciation Net Nuclear $ 27,091 $ 14,682 $ 12,409 $ 26,800 $ 14,149 $ 12,651 Coal-fired (1) 19,029 15,760 3,269 20,177 16,635 3,542 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 Hydroelectric 4,391 1,352 3,039 4,307 1,288 3,019 Other electrical plant 2,068 678 1,390 1,763 737 1,026 Multipurpose dams 900 419 481 900 413 487 Other stewardship 26 9 17 27 9 18 Total $ 71,574 $ 38,716 $ 32,858 $ 70,989 $ 38,793 $ 32,196 Note (1) TVA recognized accelerated depreciation as a result of the decision to idle or retire certain units and the potential retirement of the remainder of the coal-fired fleet by 2035. See Note 8 — Plant Closures . 8 . Plant Closures Background 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. TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035, and that evaluation includes 98 Table of Contents 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. 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. The cumulative impact approximates $ 176 million of additional depreciation since January 2023, related to this decision. In addition, TVA's decision to retire the nine units at Kingston is estimated to result in approximately $ 9 million of additional depreciation quarterly, which does not include any potential impact from additions or retirements to net completed plant. The cumulative impact approximates $ 54 million of additional depreciation since April 2024 related to this decision. 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. 9 . Leases The following table provides information regarding the presentation of leases on the Consolidated Balance Sheets: Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions) 2025 2024 Assets Operating Operating lease assets, net of amortization $ 113 $ 149 Finance Finance leases 663 729 Total lease assets $ 776 $ 878 Liabilities Current Operating Accounts payable and accrued liabilities $ 46 $ 63 Finance Accounts payable and accrued liabilities 86 80 Non-current Operating Other long-term liabilities 63 88 Finance Finance lease liabilities 640 700 Total lease liabilities $ 835 $ 931 99 Table of Contents TVA's leases consist primarily of railcars, equipment, real estate/land, power generating facilities, and gas pipelines. TVA's leases have various terms and expiration dates remaining from less than one year to 21 years. The components of lease costs were as follows: Lease Costs For the years ended September 30 (in millions) 2025 2024 2023 Operating lease costs (1) $ 73 $ 77 $ 69 Variable lease costs (1)(5) 337 258 134 Short-term lease costs (1) 15 10 18 Finance lease costs Amortization of lease assets (2) 91 79 57 Interest on lease liabilities (3)(4) 46 37 43 Total finance lease costs 137 116 100 Total lease costs $ 562 $ 461 $ 321 Notes (1) Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations. (2) Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations. (3) Expense is included in Interest expense on the Consolidated Statements of Operations. (4) Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense. (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 energy payments that are based on energy production levels. Payments under those agreements are solely based on the actual output over the lease term. Certain TVA lease agreements contain renewal options. Those renewal options that are reasonably certain to be exercised are included in the lease measurements. The following table contains additional information with respect to cash and non-cash activities related to leases: Amounts Recognized on TVA's Consolidated Statements of Cash Flows For the years ended September 30 (in millions) 2025 2024 2023 Operating cash flows for operating leases $ 72 $ 78 $ 77 Operating cash flows for finance leases 46 37 43 Financing cash flows for finance leases 82 76 56 Lease assets obtained in exchange for lease obligations (non-cash) Operating leases $ 14 $ 115 $ 84 Finance leases 28 230 3 TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement. This resulted in an interest rate that was higher than TVA's incremental borrowing rate. The weighted average remaining lease terms in years and the weighted average discount rate for TVA's operating and finance leases were as follows: 100 Table of Contents Weighted Averages At September 30 2025 2024 Weighted average remaining lease terms Operating leases 3 years 4 years Finance leases (1) 8 years 9 years Weighted average discount rate (2) Operating leases 4.2 % 4.3 % Finance leases 17.0 % 17.6 % Note (1) One of TVA's finance leases includes an option period to extend, which TVA is reasonably certain to exercise. (2) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. If the rate used by the lessor is not readily determinable, TVA uses its incremental borrowing rate as permitted by accounting guidance. The incremental borrowing rate is influenced by TVA's credit rating and lease term and as such may differ for individual leases, embedded leases, or portfolios of leased assets. The following table presents maturities of lease liabilities and a reconciliation of the undiscounted cash flows to lease liabilities at September 30, 2025 : Future Minimum Lease Payments Minimum payments outstanding at September 30, 2025 (in millions) Operating leases 2026 $ 50 2027 35 2028 19 2029 4 2030 2 Thereafter 6 Minimum annual payments 116 Less: present value discount ( 7 ) Operating present value of net minimum lease payments $ 109 Finance leases 2026 $ 144 2027 142 2028 137 2029 134 2030 133 Thereafter 340 Minimum annual payments 1,030 Less: amount representing interest ( 304 ) Finance present value of net minimum lease payments $ 726 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. These PPAs have terms of 15 - 20 years and are expected to commence between January 2026 and December 2028. Total capacity payments related to these batteries over the term of these PPAs are expected to total $ 862 million. 101 Table of Contents 10 . Other Long-Term Assets The table below summarizes the types and amounts of TVA's other long-term assets: Other Long-Term Assets At September 30 (in millions) 2025 2024 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 45 44 Commodity contract derivative assets 10 2 Other 84 88 Total other long-term assets $ 506 $ 344 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. Under 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 . TVA's loans and other long-term receivables primarily consist of economic development loans for qualifying organizations and a receivable for reimbursements to recover the cost of providing long-term, on-site storage for spent nuclear fuel. 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 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. Loans receivables are reported net of allowances for uncollectible accounts. See Note 1 — Summary of Significant Accounting Policies — Allowance for Uncollectible Accounts .. The allowance components, which consist of a collective allowance and specific loans allowance, are based on the risk characteristics of TVA's loans. Loans that share similar risk characteristics are evaluated on a collective basis in measuring credit losses, while loans that do not share similar risk characteristics with other loans are evaluated on an individual basis. Allowance Components At September 30 (in millions) 2025 2024 EnergyRight ® loan reserve $ 1 $ 1 Economic development loan specific loan reserve 1 1 Total allowance for loan losses $ 2 $ 2 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. The loans 102 Table of Contents 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. 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. 103 Table of Contents 11 . Regulatory Assets and Liabilities TVA records certain assets and liabilities that result from the regulated ratemaking process that would not be recorded under GAAP for non-regulated entities. As such, certain items that would generally be reported in earnings or that would impact the Consolidated Statements of Operations are recorded as regulatory assets or regulatory liabilities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities generally represent obligations to make refunds to customers for previous collections for costs that are not likely to be incurred or deferral of gains that will be credited to customers in future periods. Components of regulatory assets and regulatory liabilities are summarized in the table below. Regulatory Assets and Liabilities At September 30 (in millions) 2025 2024 Current regulatory assets 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 Non-current regulatory assets Non-nuclear decommissioning costs 5,563 6,187 Retirement benefit plans deferred costs 1,531 1,979 Unrealized losses on interest rate derivatives 316 447 Environmental compliance and remediation costs 308 215 Nuclear decommissioning costs 149 362 Unrealized losses on commodity contract derivatives 12 64 Other non-current regulatory assets 168 154 Total non-current regulatory assets 8,047 9,408 Total regulatory assets $ 8,174 $ 9,599 Current regulatory liabilities Fuel cost adjustment tax equivalents $ 203 $ 169 Unrealized gains on commodity contract derivatives 14 5 Fuel cost adjustment payable 11 — Total current regulatory liabilities 228 174 Non-current regulatory liabilities Retirement benefit plans deferred credits 131 81 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 104 Table of Contents 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) . TVA measures the funded status of its pension and post-retirement ("OPEB") benefit plans at each year-end balance sheet date. The funded status is measured as the difference between the fair value of plan assets and the benefit obligations at the measurement date for each plan. The changes in funded status are actuarial gains and losses that are recognized on TVA's Consolidated Balance Sheets by adjusting the recognized pension and OPEB liabilities, with the offset deferred as a regulatory asset or a regulatory liability. In an unregulated environment, these deferred costs (credits) would be recognized as an increase or decrease to accumulated other comprehensive income (loss) ("AOCI"). "Incurred cost" is a cost arising from cash paid out or an obligation to pay for an acquired asset or service, and a loss from any cause that has been sustained and for which payment has been or must be made. In the cases of pension and OPEB costs, the unfunded obligation represents a projected liability to the employee for services rendered, and thus it meets the definition of an incurred cost. 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. 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. 105 Table of Contents The regulatory asset and liability are classified as long-term, which is consistent with the pension and OPEB liabilities, and are not amortized to the Consolidated Statements of Operations over a specified recovery period. They are adjusted either upward or downward each year in conjunction with the adjustments to the unfunded pension liability and OPEB liability, as calculated by the actuaries. Ultimately the regulatory asset and liability will be recognized in the Consolidated Statements of Operations in the form of pension and OPEB expense as the actuarial liabilities are eliminated in future periods. See Note 21 — Benefit Plans — Obligations and Funded Status . Additionally on October 1, 2014, TVA began recognizing pension costs as a regulatory asset to the extent that the amount calculated under GAAP as pension expense differs from the amount TVA contributes to the pension plan. As a result of previous plan design changes, future contributions are expected to exceed the expense calculated under U.S. GAAP. Accordingly, TVA discontinued this regulatory accounting practice as all such deferred costs were recovered as of September 30, 2023. Environmental Compliance and Remediation Costs. TVA uses regulatory accounting for certain amounts associated with compliance with an order, regulation, settlement, or lawsuit, or certain costs associated with environmental remediation activities, including but not limited to those involving environmental cleanup activities and groundwater activities. Costs will be recovered in rates based on the average life of debt financed to fund actual expenditures. See Note 23 — Contingencies and Legal Proceedings — Contingencies — Environmental Matters. Nuclear Decommissioning Costs. Nuclear decommissioning costs include (1) certain deferred charges related to the future closure and decommissioning of TVA's nuclear generating units under the Nuclear Regulatory Commission ("NRC") requirements, (2) recognition of changes in the liability, (3) recognition of changes in the value of TVA's NDT, and (4) certain other deferred charges under the accounting rules for AROs. These future costs can be funded through a combination of investment funds set aside in the NDT and ART and future earnings on those investment funds. Deferred charges will be recovered in rates based on the analysis of expected expenditures, contributions, and investment earnings required to recover the decommissioning costs. See Note 1 — Summary of Significant Accounting Policies — Investment Funds. 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. See Note 14 — Asset Retirement Obligations and Note 17 — Fair Value Measurements. Other Non-Current Regulatory Assets. Other non-current regulatory assets consist of the following: Deferred Lease Asset and Other Financing Obligations . For certain leases, TVA recognized the initial finance lease and other financing asset and liability at inception of the lease or other obligation. However, the annual expense recognized in rates is equal to the annual payments, which differs from GAAP treatment for non-regulated entities. This practice results in TVA's asset balances being higher than they otherwise would have been under GAAP, with the difference representing a regulatory asset related to the lease or other financing obligation. These costs will be amortized over the respective lease or other financing obligation terms as payments are made. As the costs associated with this regulatory asset are not currently being considered in rates and the asset is expected to increase over the next year, the regulatory asset has been classified as long-term. Debt Reacquisition Costs . Reacquisition expenses, call premiums, and other related costs, such as unamortized debt issue costs associated with redeemed Bond issues, are deferred and amortized (accreted) on a straight-line basis over the weighted average life of TVA's debt portfolio. Because timing of additional reacquisition expenses and changes to the weighted average life of the debt are uncertain, the regulatory asset is classified as long-term. Retirement Removal Costs . Retirement removal costs, net of salvage, that are not legally required are recognized as a regulatory asset. Net removal costs are amortized over a one-year period subsequent to completion of the removal activities. TVA treats this regulatory asset as long-term in its entirety primarily because it relates to assets that are long-term in nature. Fuel Cost Adjustment Tax Equivalents. The fuel cost adjustment includes a provision related to the current funding of the future payments TVA will make. As TVA records the fuel cost adjustment, five percent of the calculation that relates to a future asset or liability for tax equivalent payments is recorded as a current regulatory liability and paid or refunded in the following year. 12 . Variable Interest Entities A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of owning a controlling financial interest. 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 106 Table of Contents 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. John Sevier VIEs In 2012, TVA entered into a $ 1.0 billion construction management agreement and lease financing arrangement with John Sevier Combined Cycle Generation LLC ("JSCCG") for the completion and lease by TVA of the John Sevier Combined Cycle Facility ("John Sevier CCF"). JSCCG is a special single-purpose limited liability company formed in January 2012 to finance the John Sevier CCF through a $ 900 million secured note issuance (the "JSCCG notes") and the issuance of $ 100 million of membership interests subject to mandatory redemption. The membership interests were purchased by John Sevier Holdco LLC ("Holdco"). Holdco is a special single-purpose entity, also formed in January 2012, established to acquire and hold the membership interests in JSCCG. A non-controlling interest in Holdco 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 Holdco in JSCCG were purchased with proceeds from the issuance of $ 100 million of secured notes (the "Holdco notes") and are subject to mandatory redemption pursuant to a schedule of amortizing, semi-annual payments due each January 15 and July 15, with a final payment due in January 2042. The payment dates for the mandatorily redeemable membership interests are the same as those of the Holdco notes. The sale of the JSCCG notes, the membership interests in JSCCG, and the Holdco notes closed in January 2012. The JSCCG notes are secured by TVA's lease payments, and the Holdco notes are secured by Holdco's investment in, and amounts receivable from, JSCCG. TVA's lease payments to JSCCG are equal to and payable on the same dates as JSCCG's and Holdco's semi-annual debt service payments. In addition to the lease payments, TVA pays administrative and miscellaneous expenses incurred by JSCCG and Holdco. 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 JSCCG and Holdco, TVA has determined that it has a variable interest in each of these entities. Based on its analysis, TVA has concluded that it is the primary beneficiary of JSCCG and Holdco and, as such, is required to account for the VIEs on a consolidated basis. Holdco's membership interests in JSCCG are eliminated in consolidation. Southaven VIE In 2013, TVA entered into a $ 400 million lease financing arrangement with Southaven Combined Cycle Generation LLC ("SCCG") for the lease by TVA of the Southaven Combined Cycle Facility ("Southaven CCF"). SCCG is a special single-purpose limited liability company formed in June 2013 to finance the Southaven CCF through a $ 360 million secured notes issuance (the "SCCG notes") and the issuance of $ 40 million of membership interests subject to mandatory redemption. The membership interests were purchased by Southaven Holdco LLC ("SHLLC"). SHLLC is a special single-purpose entity, also formed in June 2013, established to acquire and hold the membership interests in SCCG. A non-controlling interest in SHLLC is held by a third-party through nominal membership interests, to which none of the income, expenses, and cash flows of SHLLC are allocated. The membership interests held by SHLLC were purchased with proceeds from the issuance of $ 40 million of secured notes (the "SHLLC notes") and are subject to mandatory redemption pursuant to a schedule of amortizing, semi-annual payments due each February 15 and August 15, with a final payment due on August 15, 2033. The payment dates for the mandatorily redeemable membership interests are the same as those of the SHLLC notes, and the payment amounts are sufficient to provide returns on, as well as returns of, capital until the investment has been repaid to SHLLC in full. The rate of return on investment to SHLLC is seven percent, which is reflected as interest expense in the Consolidated Statements of Operations. SHLLC is required to pay a pre-determined portion of the return on investment to Seven States Southaven, LLC ("SSSL") on each lease payment date as agreed in SHLLC's formation documents (the "Seven States Return"). The current and long-term portions of the Membership interests of VIE subject to mandatory redemption are included in Accounts payable and accrued liabilities and Other long-term liabilities, respectively. The payment dates for the mandatorily redeemable membership interests are the same as those of the SHLLC notes. The SCCG notes are secured by TVA's lease payments, and the SHLLC notes are secured by SHLLC's investment in, and amounts receivable from, SCCG. TVA's lease payments to SCCG are payable on the same dates as SCCG's and SHLLC's semi-annual debt service payments and are equal to the sum of (i) the amount of SCCG's semi-annual debt service payments, (ii) the amount of SHLLC's semi-annual debt service payments, and (iii) the amount of the Seven States Return. In addition to the lease payments, TVA pays administrative and miscellaneous expenses incurred by SCCG and SHLLC. Certain agreements related to this transaction contain default and acceleration provisions. In the event that TVA were to choose to exercise an early buy out feature of the Southaven facility lease, in part or in whole, TVA must pay to SCCG amounts sufficient for SCCG to repay or partially repay on a pro rata basis the membership interests held by SHLLC, including any outstanding investment amount plus accrued but unpaid return. TVA also has the right, at any time and without any early redemption of the other portions of the Southaven facility lease payments due to SCCG, to fully repay SHLLC's investment, upon which repayment SHLLC will transfer the membership interests to a designee of TVA. 107 Table of Contents TVA participated in the design, business activity, and financial support of SCCG and has determined that it has a direct variable interest in SCCG resulting from risk associated with the value of the Southaven CCF at the end of the lease term. 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, 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 At September 30 (in millions) 2025 2024 Current liabilities Accrued interest $ 29 $ 9 Accounts payable and accrued liabilities 1 1 Current maturities of long-term debt of variable interest entities 49 37 Total current liabilities 79 47 Other liabilities Other long-term liabilities 14 16 Long-term debt, net Long-term debt of variable interest entities, net 1,632 897 Total liabilities $ 1,725 $ 960 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, 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: 108 Table of Contents Maturities Due in the Year Ending September 30 (in millions) 2026 2027 2028 2029 2030 Thereafter Long-term debt of VIEs including current maturities (1) $ 49 $ 51 $ 53 $ 56 $ 58 $ 1,431 Membership interests of variable interest entity subject to mandatory redemption 1 1 1 2 2 9 Note (1) Long-term debt of VIEs does not include non-cash item of unamortized debt issue costs of $ 17 million. Creditors of the VIEs do not have any recourse to the general credit of TVA. TVA does not have any obligations to provide financial support to the VIEs other than as prescribed in the terms of the agreements related to these transactions. 13 . Other Long-Term Liabilities 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: Other Long-Term Liabilities At September 30 (in millions) 2025 2024 (1) Interest rate swap liabilities $ 643 $ 792 Environmental compliance and remediation costs 274 226 Long-term project cost accruals 204 140 Currency swap liabilities 108 109 Operating lease liabilities 63 88 Advances for construction 61 55 Long-term deferred compensation 54 50 EnergyRight ® financing obligation 53 52 Long-term deferred revenue 39 48 Accrued long-term service agreements 25 7 Commodity contract derivative liabilities 12 64 Other 70 81 Total other long-term liabilities $ 1,606 $ 1,712 Note (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 . TVA uses interest rate swaps to fix variable short-term debt to a fixed rate. 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. 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. 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. 109 Table of Contents Currency Swap Liabilities . To protect against exchange rate risk related to British pound sterling denominated Bond transactions, TVA entered into foreign currency hedges. The values of these derivatives are included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. 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. 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. TVA receives refundable and non-refundable advances for construction that are generally intended to defray all or a portion of the costs of building or extending TVA’s existing power assets. Amounts received are deferred as a liability with the long-term portion representing amounts that will not be recognized within the next 12 months. As projects meet milestones or other contractual obligations, the refundable portion is refunded to the customer and the non-refundable portion is recognized as contributions in aid of construction and offsets the cost of plant assets. 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 . 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, 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. 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 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 . Long-term deferred revenue represents payments received that exceed services rendered resulting in the deferral of revenue. This long-term portion represents amounts that will not be recognized within the next 12 months primarily related to fiber and transmission agreements. The current and long-term portions of the deferral 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 revenue recorded in Accounts payable and accrued liabilities was $ 25 million and $ 28 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. 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. 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. 14. Asset Retirement Obligations 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. Those assumptions include (1) estimates of the cost of decommissioning; (2) the method of decommissioning and the timing of the related cash flows; (3) the license period of the nuclear plant, considering the probability of license extensions; (4) cost escalation factors; and (5) the credit adjusted risk free rate to measure the obligation at the present value of the future estimated costs. TVA has ascribed probabilities to two different decommissioning methods related to its nuclear decommissioning obligation estimate: the DECON method and the SAFSTOR method. 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 110 Table of Contents 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. To estimate its decommissioning obligation related to these assets, 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. Those assumptions include (1) estimates of the costs of decommissioning, (2) the method of decommissioning and the timing of the related cash flows, (3) the expected retirement date of each asset, (4) cost escalation factors, and (5) the credit adjusted risk free rate to measure the obligation at the present value of the future estimated costs. TVA bases its decommissioning estimates for each asset on its identified preferred closure method. 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 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. 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. Revisions to the additional estimated non-nuclear AROs from the Legacy CCR Rule will be made whenever factors indicate that the timing or amounts of estimated cash flows have changed. 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. The increase was primarily attributable to a change in closure liabilities of $ 231 million at Gallatin Fossil Plant based on scope changes, new vendor bids, and updated cost estimates for activities associated with final closure and $ 76 million at Cumberland based on scope changes to the interim closure plan and updated cost estimates for activities associated with final closure. Additionally, TVA completed a study of its CCR post-closure care obligations in September 2024, which resulted in an increase of $ 32 million as a result of expected cost increases. In September 2024, TVA decreased its liability for legacy CCR areas by $ 38 million as a result of revised acreage assumptions for areas covered by the Legacy CCR Rule. Revisions in nuclear estimates decreased the liability balance by $ 160 million for the year ended September 30, 2024. The decrease was primarily attributable to an estimate revision of $ 164 million following the filing of a subsequent license renewal ("SLR") application with the Nuclear Regulatory Commission ("NRC") for Browns Ferry Nuclear Plant ("Browns Ferry"). If approved, the SLR will allow for an additional 20 years of operations for each of Browns Ferry's three units, resulting in a total operating life of 80 years. 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. The nuclear and non-nuclear accretion amounts were deferred as regulatory assets. During 2025, 2024, and 2023, $ 220 million, $ 188 million, and $ 188 million, respectively, of the related regulatory assets were amortized into expense as these amounts were collected in rates. See Note 11 — Regulatory Assets and Liabilities . TVA maintains investment trusts to help fund its decommissioning obligations. See Note 17 — Fair Value Measurements — Investment Funds and Note 23 — Commitments and Contingencies — Contingencies — Decommissioning Costs for a discussion of the trusts' objectives and the current balances of the trusts. 111 Table of Contents Asset Retirement Obligation Activity (in millions) Nuclear Non-Nuclear Total Balance at September 30, 2023 $ 3,808 $ 3,681 $ 7,489 Settlements ( 4 ) ( 253 ) ( 257 ) Revisions in estimate (non-cash) ( 160 ) 292 132 Additional obligations (non-cash) — 3,136 3,136 Accretion (recorded as regulatory asset) 170 136 306 Balance at September 30, 2024 3,814 6,992 10,806 (1) Settlements ( 15 ) ( 255 ) ( 270 ) Revisions in estimate (non-cash) 2 ( 563 ) ( 561 ) Accretion (recorded as regulatory asset) 175 264 439 Balance at September 30, 2025 $ 3,976 $ 6,438 $ 10,414 (1) Note (1) Includes $ 313 million and $ 283 million at September 30, 2025 and 2024, respectively, in Current liabilities. 15 . Debt and Other Obligations General The TVA Act authorizes TVA to issue Bonds in an amount not to exceed $ 30.0 billion at any time. At September 30, 2025, TVA had only two types of Bonds outstanding: power bonds and discount notes. Power bonds have maturities between one year and 50 years, and discount notes have maturities of less than one year. Power bonds and discount notes are both issued pursuant to Section 15d of the TVA Act and pursuant to the Basic Tennessee Valley Authority Power Bond Resolution adopted by the TVA Board on October 6, 1960, as amended on September 28, 1976, October 17, 1989, and March 25, 1992 (the "Basic Resolution"). Bonds are not obligations of the U.S., and the U.S. does not guarantee the payments of principal or interest on Bonds. 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, 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. Once net power proceeds have been applied to payments on power bonds and discount notes as well as any other Bonds that TVA may issue in the future that rank on parity with or subordinate to power bonds and discount notes, Section 2.3 of the Basic Resolution provides that the remaining net power proceeds shall be used only for (1) minimum payments into the U.S. Treasury required by the TVA Act as repayment of, and as a return on, the Power Program Appropriation Investment; (2) investment in power system assets; (3) additional reductions of TVA's capital obligations; and (4) other lawful purposes related to TVA's power business. The TVA Act and the Basic Resolution each contain two bond tests: the rate test and the bondholder protection test. Under the rate test, TVA must charge rates for power which will produce gross revenues sufficient to provide funds for, among other things, debt service on outstanding Bonds. As of September 30, 2025, TVA was in compliance with the rate test. Under the bondholder protection test, TVA must, in successive five-year periods, use an amount of net power proceeds at least equal to the sum of (1) the depreciation accruals and other charges representing the amortization of capital expenditures and (2) the net proceeds from any disposition of power facilities for either the reduction of its capital obligations (including Bonds and the Power Program Appropriation Investment) or investment in power assets. TVA met the bondholder protection test for the five-year period ended September 30, 2025 and must next meet the bondholder protection test for the five-year period ending September 30, 2030. Secured Debt of VIEs 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. 112 Table of Contents 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 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. See Note 12 — Variable Interest Entities — Southaven VIE . TVA used the proceeds from the transaction primarily to fund the acquisition of the Southaven CCF from SSSL. 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. The Holdco notes require a $ 10 million balloon payment upon maturity. See Note 12 — Variable Interest Entities — John Sevier VIEs . 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, 2025 and 2024 totaled $ 1.7 billion and $ 934 million, respectively. Short-Term Debt The following table provides information regarding TVA's short-term borrowings: Short-Term Borrowings At September 30 2025 2024 Gross amount outstanding - discount notes (in millions) $ — $ 1,168 Weighted average interest rate - discount notes — % 4.76 % Put Options TVA has two issues of Putable Automatic Rate Reset Securities ("PARRS") outstanding. After a fixed-rate period of five years, the coupon rate on the PARRS may automatically be reset downward under certain market conditions on an annual basis. The coupon rate reset on the PARRS is based on a calculation. For both series of PARRS, the coupon rate will reset downward on the reset date if the rate calculated is below the then-current coupon rate on the Bond. The calculation dates, potential reset dates, and terms of the calculation are different for each series. The coupon rate on the 1998 Series D PARRS may be reset on June 1 (annually) if the sum of the five-day average of the 30-Year Constant Maturity Treasury ("CMT") rate for the week ending the last Friday in April, plus 94 basis points, is below the then-current coupon rate. The coupon rate on the 1999 Series A PARRS may be reset on May 1 (annually) if the sum of the five-day average of the 30-Year CMT rate for the week ending the last Friday in March, plus 84 basis points, is below the then-current coupon rate. The coupon rates may only be reset downward, but investors may request to redeem their Bonds at par value in conjunction with a coupon rate reset for a limited period of time prior to the reset dates under certain circumstances. The coupon rate for the 1998 Series D PARRS, which mature in June 2028, has been reset eight times, from an initial rate of 6.750 percent to the current rate of 2.134 percent. In connection with these resets, $ 318 million of the Bonds have been redeemed; therefore, $ 256 million of the Bonds were outstanding at September 30, 2025. The coupon rate for the 1999 Series A PARRS, which mature in May 2029, has been reset seven times, from an initial rate of 6.50 percent to the current rate of 2.216 percent. In connection with these resets, $ 316 million of the Bonds have been redeemed; therefore, $ 208 million of the Bonds were outstanding at September 30, 2025. Due to the contingent nature of the put option on the PARRS, TVA determines whether the PARRS should be classified as long-term debt or current maturities of long-term debt by calculating the expected reset rate for the Bonds on the calculation dates, described above. If the determination date for reset is before the balance sheet date of the reporting period and the expected reset rate is less than the then-current coupon rate on the PARRS, the PARRS are included in current maturities. Otherwise, the PARRS are included in long-term debt. 113 Table of Contents Debt Securities Activity The table below summarizes the long-term debt securities activity for the years ended September 30, 2025 and 2024. Debt Securities Activity For the years ended September 30 (in millions) 3967 2025 2024 Issues Variable interest entities $ 800 $ — 2024 Series A (1) — 1,000 2025 Series A (2) 1,250 — 2025 Series B (3) 1,500 — 2025 Series C (4) 1,250 — Discount on debt issues ( 33 ) ( 9 ) Total $ 4,767 $ 991 Redemptions/Maturities (5) 2009 Series B $ 22 $ 22 2014 Series A — 1,000 2020 Series A 1,000 — Total redemptions/maturities of power bonds 1,022 1,022 Debt of variable interest entities 41 35 Total redemptions/maturities of debt $ 1,063 $ 1,057 Notes (1) The 2024 Series A Bonds were issued at 99.109 percent of par. (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. Debt Outstanding Total debt outstanding at September 30, 2025 and 2024, consisted of the following: Short-Term Debt At September 30 (in millions) CUSIP or Other Identifier Maturity Coupon Rate 2025 2024 Short-term debt, net of discounts $ — $ 1,167 Current maturities of long-term debt of variable interest entities 49 37 Current maturities of power bonds issued at par 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 Notes (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. 114 Table of Contents Long-Term Debt At September 30 (in millions) CUSIP or Other Identifier Maturity Coupon Rate 2025 Par 2024 Par Stock Exchange Listings 880591CJ9 11/1/2025 6.750 % $ — $ 1,350 New York, Hong Kong, Luxembourg, Singapore 880591EU2 2/1/2027 2.875 % 1,000 1,000 New York 880591EZ1 3/15/2028 3.875 % 1,000 1,000 New York 880591300 (1) 6/1/2028 2.134 % 256 256 New York 880591409 (1) 5/1/2029 2.216 % 208 208 New York 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 880591DP4 6/7/2032 6.587 % (2) 337 (3) 335 (3) New York, Luxembourg 880591DV1 7/15/2033 4.700 % 472 472 New York, Luxembourg 880591EF5 6/15/2034 3.770 % 96 116 None 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 880591CK6 4/1/2036 5.980 % 121 121 New York 880591CS9 4/1/2036 5.880 % 1,500 1,500 New York 880591CP5 1/15/2038 6.150 % 1,000 1,000 New York 880591ED0 6/15/2038 5.500 % 500 500 New York 880591EH1 9/15/2039 5.250 % 2,000 2,000 New York 880591EP3 12/15/2042 3.500 % 1,000 1,000 New York 880591DU3 6/7/2043 4.962 % (2) 202 (3) 201 (3) New York, Luxembourg 880591EB4 1/15/2048 4.875 % 500 500 New York, Luxembourg 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 880591EJ7 9/15/2060 4.625 % 1,000 1,000 New York 880591ES7 9/15/2065 4.250 % 1,000 1,000 New York Subtotal 20,628 17,995 Unamortized discounts, premiums, issue costs, and other ( 167 ) ( 128 ) Total long-term outstanding power bonds, net 20,461 17,867 Long-term debt of VIEs, net 1,632 897 Total long-term debt, net $ 22,093 $ 18,764 Notes (1) TVA PARRS, CUSIP numbers 880591300 and 880591409, may be redeemed under certain conditions. See Put Options above. (2) The coupon rate represents TVA's effective interest rate. (3) CUSIP numbers 880591DP4 and 880591DU3 i nclude total net exchange gain from currency transactions of $ 59 million and $ 62 million at September 30, 2025 and 2024 , respectively . 115 Table of Contents Maturities Due in the Year Ending September 30 (in millions) 2026 2027 2028 2029 2030 Thereafter Total Long-term power bonds including current maturities (1) $ 1,370 $ 1,020 $ 1,272 $ 220 $ 2,262 $ 15,913 $ 22,057 Notes (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 revolving credit facilities totaling $ 2.7 billion. See the table below for additional information on the four long-term revolving credit facilities. The interest rate on any borrowing under these facilities varies based on market factors and the rating of TVA's senior unsecured, long-term, non-credit-enhanced debt. TVA is required to pay an unused facility fee on the portion of the total $ 2.7 billion that TVA has not borrowed or committed under letters of credit. This fee, along with letter of credit fees, may fluctuate depending on the rating of TVA's senior unsecured, long-term, non-credit-enhanced debt. At September 30, 2025 and 2024, there were $ 498 million and $ 566 million, respectively, of letters of credit outstanding under these facilities, and there were no borrowings outstanding. TVA's letters of credit are primarily posted as collateral under TVA's interest rate swaps. See Note 16 — Risk Management Activities and Derivative Transactions — Other Derivative Instruments — Collateral . 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 revolving credit facilities: Summary of Credit Facilities At September 30, 2025 (in millions) Maturity Date Facility Limit Letters of Credit Outstanding Cash Borrowings Availability March 2026 $ 150 $ 38 $ — $ 112 March 2027 1,000 135 — 865 February 2028 500 215 — 285 September 2030 1,000 110 — 890 Total $ 2,650 $ 498 $ — $ 2,152 TVA and the U.S. Treasury, pursuant to the TVA Act, have entered into a memorandum of understanding under which the U.S. Treasury provides TVA with a $ 150 million credit facility. This credit facility was renewed for 2026 with a maturity date of September 30, 2026. Access to this credit facility or other similar financing arrangements with the U.S. Treasury has been available to TVA since the 1960s. TVA can borrow under the U.S. Treasury credit facility only if it cannot issue Bonds in the market on reasonable terms, and TVA considers the U.S. Treasury credit facility a secondary source of liquidity. The interest rate on any borrowing under this facility is based on the average rate on outstanding marketable obligations of the U.S. with maturities from date of issue of 12 months or less. There were no outstanding borrowings under the facility at September 30, 2025. The availability of this credit facility may be impacted by how the U.S. government addresses the possibility of approaching its debt limit. 16. Risk Management Activities and Derivative Transactions TVA is exposed to various risks related to commodity prices, investment prices, interest rates, currency exchange rates, and inflation as well as counterparty credit and performance risks. To help manage certain of these risks, TVA has historically entered into various derivative transactions, principally commodity option contracts, forward contracts, swaps, swaptions, futures, and options on futures. Overview of Accounting Treatment TVA recognizes certain of its derivative instruments as either assets or liabilities on its Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of these instruments depends on (1) whether TVA uses regulatory accounting to defer the derivative gains and losses, (2) whether the derivative instrument has been designated and qualifies for hedge accounting treatment, and (3) if so, the type of hedge relationship (for example, cash flow hedge). 116 Table of Contents The following tables summarize the accounting treatment that certain of TVA's financial derivative transactions receive: Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 1) Amount of Mark-to-Market Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) For the years ended September 30 (in millions) Derivatives in Cash Flow Hedging Relationship Objective of Hedge Transaction Accounting for Derivative Hedging Instrument 2025 2024 Currency swaps To protect against changes in cash flows caused by changes in foreign currency exchange rates (exchange rate risk) Unrealized gains and losses are recorded in AOCI and reclassified to Interest expense to the extent they are offset by gains and losses on the hedged transaction $ 1 $ 25 Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2) (1) Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) to Interest Expense For the years ended September 30 (in millions) Derivatives in Cash Flow Hedging Relationship 2025 2024 Currency swaps $ 3 $ 48 Note (1) There were no amounts excluded from effectiveness testing for any of the periods presented. Based on forecasted foreign currency exchange rates, TVA expects to reclassify approximately $ 14 million of gains from AOCI to Interest expense within the next 12 months to offset amounts anticipated to be recorded in Interest expense related to the forecasted exchange loss on the debt. Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment Amount of Gain (Loss) Recognized in Income on Derivatives (1) For the years ended September 30 (in millions) Derivative Type Objective of Derivative Accounting for Derivative Instrument 2025 2024 Interest rate swaps To fix short-term debt variable rate to a fixed rate (interest rate risk) Mark-to-market gains and losses are recorded as regulatory liabilities and assets, respectively Realized gains and losses are recognized in Interest expense when incurred during the settlement period and are presented in operating cash flow $ 45 $ ( 31 ) Commodity derivatives under the FHP To protect against fluctuations in market prices of purchased commodities (price risk) Mark-to-market gains and losses are recorded as regulatory liabilities and assets, respectively Realized gains and losses are recognized in Fuel expense or Purchased power expense as the contracts settle to match the delivery period of the underlying commodity (2) ( 93 ) ( 295 ) Notes (1) All of TVA's derivative instruments that do not receive hedge accounting treatment have unrealized gains (losses) that would otherwise be recognized in income but instead are deferred as regulatory liabilities and assets. As such, there were no related gains (losses) recognized in income for these unrealized gains (losses) for the years ended September 30, 2025 and 2024. (2) Of the amount recognized in 2025, $ 77 million and $ 16 million were reported in Fuel expense and Purchased power expense, respectively. Of the amount recognized in 2024, $ 245 million and $ 50 million were reported in Fuel expense and Purchased power expense, respectively. 117 Table of Contents Fair Values of TVA Derivatives At September 30 (in millions) 2025 2024 Derivatives That Receive Hedge Accounting Treatment: Balance Balance Sheet Presentation Balance Balance Sheet Presentation Currency swaps £250 million Sterling $ ( 47 ) Accounts payable and accrued liabilities $( 4 ); Other long-term liabilities $( 43 ) $ ( 49 ) Accounts payable and accrued liabilities $( 4 ); Other long-term liabilities $( 45 ) £150 million Sterling ( 68 ) Accounts payable and accrued liabilities $( 3 ); Other long-term liabilities $( 65 ) ( 67 ) Accounts payable and accrued liabilities $( 3 ); Other long-term liabilities $( 64 ) Derivatives That Do Not Receive Hedge Accounting Treatment: Balance Balance Sheet Presentation Balance Balance Sheet Presentation Interest rate swaps $1.0 billion notional $ ( 526 ) Accounts payable and accrued liabilities $( 13 ); Accrued interest $( 28 ); Other long-term liabilities $( 485 ) $ ( 622 ) Accounts payable and accrued liabilities $( 10 ), Accrued interest $( 26 ); Other long-term liabilities $( 586 ) $476 million notional ( 172 ) Accounts payable and accrued liabilities $( 5 ); Accrued interest $( 9 ); Other long-term liabilities $( 158 ) ( 218 ) Accounts payable and accrued liabilities $( 3 ), Accrued interest $( 9 ); Other long-term liabilities $( 206 ) Commodity contract derivatives 10 Other current assets $ 14 ; Other long-term assets $ 2 ; Accounts payable and accrued liabilities $( 2 ); Other long-term liabilities $( 4 ) 2 Other current assets $ 5 ; Other long-term assets $ 2 ; Accounts payable and accrued liabilities $( 3 ); Other long-term liabilities $( 2 ) Commodity derivatives under the FHP ( 57 ) Other long-term assets $ 8 ; Accounts payable and accrued liabilities $( 57 ); Other long-term liabilities $( 8 ) ( 161 ) Accounts payable and accrued liabilities $( 99 ); Other long-term liabilities $( 62 ) Cash Flow Hedging Strategy for Currency Swaps To protect against exchange rate risk related to British pound sterling denominated Bond transactions, TVA entered into foreign currency hedges at the time the Bond transactions occurred. TVA had the following currency swaps outstanding at September 30, 2025: Currency Swaps Outstanding Effective Date of Currency Swap Contract Associated TVA Bond Issues Currency Exposure Expiration Date of Swap Overall Effective Cost to TVA 2001 £ 250 million 2032 6.587 % 2003 £ 150 million 2043 4.962 % When the dollar strengthens against the British pound sterling, the exchange gain on the Bond liability and related accrued interest is offset by an equal amount of loss on the swap contract that is reclassified out of AOCI. Conversely, the exchange loss on the Bond liability and related accrued interest is offset by an equal amount of gain on the swap contract that is reclassified out of AOCI. All such exchange gains or losses on the Bond liability and related accrued interest are included in Long-term debt, net and Accrued interest, respectively. The offsetting exchange losses or gains on the swap contracts are recognized in AOCI. If any gain (loss) were to be incurred as a result of the early termination of the foreign currency swap contract, the resulting income (expense) would be amortized over the remaining life of the associated Bond as a component of Interest expense. The values of the currency swap liabilities are included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. Derivatives Not Receiving Hedge Accounting Treatment Interest Rate Derivatives . Generally TVA uses interest rate swaps to fix variable short-term debt to a fixed rate, and TVA uses regulatory accounting treatment to defer the MtM gains and losses on its interest rate swaps. 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 118 Table of Contents 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 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, 2025, TVA's natural gas commodity contract derivatives had terms of up to 10 years. Commodity Contract Derivatives At September 30 2025 2024 Number of Contracts Notional Amount Fair Value (MtM) (in millions) Number of Contracts Notional Amount Fair Value ( MtM ) (in millions) Natural gas contract derivatives 53 562 million mmBtu $ 10 45 321 million mmBtu $ 2 Commodity Derivatives under the FHP. Currently, TVA is hedging exposure to the price of natural gas under the FHP. There is no Value at Risk aggregate transaction limit under the current FHP structure, but the TVA Board reviews and authorizes the use of tolerances and measures annually. TVA's FHP policy prohibits trading financial instruments under the FHP for speculative purposes. At September 30, 2025, TVA's natural gas swap contracts under the FHP had remaining terms of up to four years. Commodity Derivatives under Financial Hedging Program (1) At September 30 2025 2024 Number of Contracts Notional Amount Fair Value (MtM) (in millions) Number of Contracts Notional Amount Fair Value (MtM) (in millions) Natural gas swap contracts 295 300 million mmBtu $ ( 57 ) 126 230 million mmBtu $ ( 161 ) Note (1) Fair value amounts presented are based on the net commodity position with the counterparty. Notional amounts disclosed represent the net value of contractual amounts. TVA defers all FHP unrealized gains (losses) as regulatory liabilities (assets) and records the realized gains or losses in Fuel expense and Purchased power expense to match the delivery period of the underlying commodity. 119 Table of Contents Offsetting of Derivative Assets and Liabilities The amounts of TVA's derivative instruments as reported on the Consolidated Balance Sheets are shown in the table below: Derivative Assets and Liabilities (1) At September 30 (in millions) 2025 2024 Assets Commodity contract derivatives 16 7 Commodity derivatives under the FHP (2) 8 — Total derivatives subject to master netting or similar arrangement $ 24 $ 7 Liabilities Currency swaps $ 115 $ 116 Interest rate swaps (3) 698 840 Commodity contract derivatives 6 5 Commodity derivatives under the FHP (2) 65 161 Total derivatives subject to master netting or similar arrangement $ 884 $ 1,122 Notes (1) Offsetting amounts include counterparty netting of derivative contracts. Except as discussed below, there were no other material offsetting amounts on TVA's Consolidated Balance Sheets at either September 30, 2025 or 2024. (2) At September 30, 2025, the gross derivative asset and gross derivative liability was $ 28 million and $ 85 million, respectively, with offsetting amounts for each totaling $ 20 million. At September 30, 2024, the gross derivative asset and gross derivative liability were $ 4 million and $ 165 million, respectively, with offsetting amounts for each totaling $ 4 million. (3) Letters of credit of approximately $ 442 million and $ 535 million were posted as collateral at September 30, 2025 and 2024, respectively, to partially secure the liability positions of one of the interest rate swaps in accordance with the collateral requirements for this derivative. Other Derivative Instruments Investment Fund Derivatives . Investment funds consist primarily of funds held in the NDT, ART, SERP, DCP, and RP. See Note 17 — Fair Value Measurements — Investment Funds for a discussion of the trusts, plans, and types of investments. The NDT and ART may invest in derivative instruments which may include swaps, futures, options, forwards, and other instruments. 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 $ 16 million and $ 11 million at September 30, 2025 and 2024, respectively. Collateral . 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, 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. These letters of credit reduce the available balance under the related credit facilities. TVA's assessment of the risk of its nonperformance includes a reduction in its exposure under the interest rate swap contracts as a result of this posted collateral. For all of its derivative instruments with credit-risk related contingent features: • If TVA remains a majority-owned U.S. government entity but S&P Global Ratings ("S&P") or Moody's Investors Service, Inc. ("Moody's") downgrades TVA's credit rating to AA or Aa2, respectively, TVA's collateral obligations would likely increase by $ 22 million, and • If TVA ceases to be majority-owned by the U.S. government, TVA's credit rating would likely be downgraded and TVA would be required to post additional collateral. Counterparty Risk TVA may be exposed to certain risks when a counterparty has the potential to fail to meet its obligations in accordance with agreed terms. These risks may be related to credit, operational, or nonperformance matters. To mitigate certain counterparty risk, TVA analyzes the counterparty's financial condition prior to entering into an agreement, establishes credit limits, monitors the appropriateness of those limits, as well as any changes in the creditworthiness of the counterparty, on an ongoing basis, and when required, employs credit mitigation measures, such as collateral or prepayment arrangements and master purchase and sale agreements. 120 Table of Contents Customers . TVA is exposed to counterparty credit risk associated with trade accounts receivable from delivered power sales to LPCs, and from industries and federal agencies directly served, all located in the Tennessee Valley region. Of the $ 1.9 billion and $ 1.7 billion of receivables from power sales outstanding at September 30, 2025 and 2024, respectively, nearly all of the counterparties were rated investment grade. The majority of the obligations of these customers that are not investment grade are secured by collateral. TVA is also exposed to risk from exchange power arrangements with a small number of investor-owned regional utilities related to either delivered power or the replacement of open positions of longer-term purchased power or fuel agreements. TVA believes its policies and procedures for counterparty performance risk reviews have generally protected TVA against significant exposure related to market and economic conditions. See Note 1 — Summary of Significant Accounting Policies — Allowance for Uncollectible Accounts, Note 4 — Accounts Receivable, Net , and Note 10 — Other Long-Term Assets . TVA had revenue from two LPCs that collectively accounted for 17 percent of total operating revenues for both the years ended September 30, 2025 and 2024. Suppliers. TVA assesses potential supplier performance risks, including procurement of fuel, purchased power, parts, and services. 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. In addition, TVA might not be able to acquire replacement fuel or power in a timely manner and thus might be unable to satisfy its own obligations to deliver power. 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 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 . TVA purchases a significant amount of its natural gas requirements through contracts with a variety of suppliers and purchases substantially all of its fuel oil requirements on the spot market. TVA delivers to its gas fleet under firm and non-firm transportation contracts on multiple interstate natural gas pipelines. TVA contracts for storage capacity that allows for operational flexibility and increased supply during peak gas demand scenarios or supply disruptions. TVA uses contracts of various lengths and terms to meet the projected natural gas needs of its natural gas fleet. TVA also maintains on-site, fuel oil backup to operate at the majority of the combustion turbine sites in the event of major supply disruptions. 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. Coal . 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 . Nuclear fuel is obtained predominantly through long-term uranium concentrate supply contracts, contracted conversion services, contracted enrichment services, or a combination thereof, and contracted fuel fabrication services. The supply markets for uranium concentrates and certain nuclear fuel services are subject to price fluctuations and availability restrictions. Supply market conditions may make procurement contracts subject to credit risk related to the potential nonperformance of counterparties. In the event of nonperformance by these or other suppliers, TVA believes that replacement uranium concentrate and nuclear fuel services can be obtained, although at prices that may be unfavorable when compared to the prices under the current supply agreements. Purchased Power . 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 . 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. 121 Table of Contents Derivative Counterparties . TVA has entered into physical and financial contracts that are classified as derivatives for hedging purposes, and TVA's NDT, ART, and qualified defined benefit plan ("pension plan") have entered into derivative contracts for investment purposes. If a counterparty to one of the physical or financial derivative transactions defaults, TVA might incur costs in connection with entering into a replacement transaction. If a counterparty to the derivative contracts into which the NDT, the ART, or the pension plan have entered for investment purposes defaults, the value of the investment could decline significantly or perhaps become worthless. TVA has concentrations of credit risk from the banking, coal, and gas industries because multiple companies in these industries serve as counterparties to TVA in various derivative transactions. At September 30, 2025, all of TVA's commodity derivatives under the FHP, currency swaps, and interest rate swaps were with counterparties whose Moody's credit ratings were A2 or higher. TVA classifies forward natural gas contracts as derivatives. At September 30, 2025, the forward natural gas contracts were with counterparties whose ratings ranged from B1 to A1 . 17. Fair Value Measurements Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the asset or liability's principal market, or in the absence of a principal market, the most advantageous market for the asset or liability in an orderly transaction between market participants. TVA uses market or observable inputs as the preferred source of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. Valuation Techniques The measurement of fair value results in classification into a hierarchy by the inputs used to determine the fair value as follows: Level 1 — Unadjusted quoted prices in active markets accessible by the reporting entity for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing. Level 2 — Pricing inputs other than quoted market prices included in Level 1 that are based on observable market data and that are directly or indirectly observable for substantially the full term of the asset or liability. These include quoted market prices for similar assets or liabilities, quoted market prices for identical or similar assets in markets that are not active, adjusted quoted market prices, inputs from observable data such as interest rate and yield curves, volatilities and default rates observable at commonly quoted intervals, and inputs derived from observable market data by correlation or other means. Level 3 — Pricing inputs that are unobservable, or less observable, from objective sources. Unobservable inputs are only to be used to the extent observable inputs are not available. These inputs maintain the concept of an exit price from the perspective of a market participant and should reflect assumptions of other market participants. An entity should consider all market participant assumptions that are available without unreasonable cost and effort. These are given the lowest priority and are generally used in internally developed methodologies to generate management's best estimate of the fair value when no observable market data is available. A financial instrument's level within the fair value hierarchy (where Level 1 is the highest and Level 3 is the lowest) is based on the lowest level of input significant to the fair value measurement. The following sections describe the valuation methodologies TVA uses to measure different financial instruments at fair value. Except for gains and losses on SERP, DCP, and RP assets, all changes in fair value of these assets and liabilities have been recorded as changes in regulatory assets, regulatory liabilities, or AOCI on TVA's Consolidated Balance Sheets and Consolidated Statements of Comprehensive Income (Loss). Except for gains and losses on SERP and DCP assets, there has been no impact to the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows related to these fair value measurements. Investment Funds At September 30, 2025, Investment funds were comprised of $ 5.6 billion of equity securities and debt securities classified as trading measured at fair value. Equity and trading debt securities are held in the NDT, ART, SERP, DCP, and RP. The NDT holds funds for the ultimate decommissioning of TVA's nuclear power plants. The ART holds funds primarily for the costs related to the future closure and retirement of TVA's other long-lived assets. The balances in the NDT and ART were $ 3.7 billion and $ 1.7 billion, respectively, at September 30, 2025. TVA established a SERP to provide benefits to selected employees of TVA which are comparable to those provided by competing organizations. 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 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. The NDT, ART, SERP, DCP, and RP are composed of multiple types of investments and are managed by external institutional investment managers. Most U.S. and international equities, U.S. Treasury inflation-protected securities ("TIPS"), and 122 Table of Contents 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. These measurements are based on market and income approaches with observable market inputs. Cash equivalents and other short-term investments are highly liquid securities with maturities of less than three months and 12 months, respectively. These consist primarily of discount securities such as repurchase agreements and U.S. Treasury bills. These securities may be priced at cost, which approximates fair value due to the short-term nature of the instruments. These securities are classified as Level 2. Active market pricing may be utilized for U.S. Treasury bills, which are classified as Level 1. Private equity limited partnerships, private real asset investments, and private credit investments may include holdings of investments in private real estate, venture capital, buyout, mezzanine or subordinated debt, restructuring or distressed debt, and special situations through funds managed by third-party investment managers. These investments generally involve a three -to- four -year period where the investor contributes capital, followed by a period of distribution, typically over several years. The investment period is generally, at a minimum, 10 years or longer. The NDT had unfunded commitments related to private equity limited partnerships of $ 361 million, private real assets of $ 138 million, and private credit of $ 117 million at September 30, 2025. The ART had unfunded commitments related to limited partnerships in private equity of $ 145 million, private real assets of $ 89 million, and private credit of $ 57 million at September 30, 2025. These investments have no redemption or limited redemption options and may also impose restrictions on the NDT's and ART's ability to liquidate their investments. There are no readily available quoted exchange prices for these investments. The fair value of these investments is based on information provided by the investment managers. These investments are valued on a quarterly basis. TVA's private equity limited partnerships, private real asset investments, and private credit investments are valued at net asset values ("NAV") as a practical expedient for fair value. TVA classifies its interest in these types of investments as investments measured at NAV in the fair value hierarchy. Commingled funds represent investment funds comprising multiple individual financial instruments. The commingled funds held by the NDT, ART, SERP, DCP, and RP consist of either a single class of securities, such as equity, debt, or foreign currency securities, or multiple classes of securities. All underlying positions in these commingled funds are either exchange traded or measured using observable inputs for similar instruments. The fair value of commingled funds is based on NAV per fund share (the unit of account), derived from the prices of the underlying securities in the funds. These commingled funds can be redeemed at the measurement date NAV and are classified as Commingled funds measured at NAV in the fair value hierarchy. Realized and unrealized gains and losses on equity and trading debt securities are recognized in current earnings and are based on average cost. The gains and losses of the NDT and ART are subsequently reclassified to a regulatory asset or liability account in accordance with TVA's regulatory accounting policy. See Note 1 — Summary of Significant Accounting Policies — Cost-Based Regulation and Note 11 — Regulatory Assets and Liabilities . TVA recorded unrealized gains and losses related to its equity and trading debt securities held during each period as follows: Unrealized Investment Gains (Losses) (1) For the years ended September 30 (in millions) Fund Financial Statement Presentation 2025 2024 NDT Regulatory assets (2) $ 221 $ 324 ART Regulatory assets (3) 116 171 SERP Other income, net 3 14 DCP Other income, net 1 2 Notes (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 See Note 16 — Risk Management Activities and Derivative Transactions — Cash Flow Hedging Strategy for Currency Swaps and Derivatives Not Receiving Hedge Accounting Treatment for a discussion of the nature, purpose, and contingent features of TVA's currency swaps and interest rate swaps. These swaps are classified as Level 2 valuations and are valued based on income approaches using observable market inputs for similar instruments. Commodity Contract Derivatives and Commodity Derivatives under the FHP Commodity Contract Derivatives. Most of these derivative contracts are valued based on market approaches, which utilize short-term and mid-term market-quoted prices from an external industry brokerage service. These contracts are classified as Level 2 valuations. 123 Table of Contents Commodity Derivatives under the FHP. Swap contracts are valued using a pricing model based on New York Mercantile Exchange inputs and are subject to nonperformance risk outside of the exit price. These contracts are classified as Level 2 valuations. See Note 16 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity Contract Derivatives and — Commodity Derivatives under the FHP . Nonperformance Risk The assessment of nonperformance risk, which includes credit risk, considers changes in current market conditions, readily available information on nonperformance risk, letters of credit, collateral, other arrangements available, and the nature of master netting arrangements. TVA is a counterparty to currency swaps, interest rate swaps, commodity contracts, and other derivatives which subject TVA to nonperformance risk. Nonperformance risk on the majority of investments and certain exchange-traded instruments held by TVA is incorporated into the exit price that is derived from quoted market data that is used to mark the investment to market. Nonperformance risk for most of TVA's derivative instruments is an adjustment to the initial asset/liability fair value. TVA adjusts for nonperformance risk, both of TVA (for liabilities) and the counterparty (for assets), by applying credit valuation adjustments ("CVAs"). TVA determines an appropriate CVA for each applicable financial instrument based on the term of the instrument and TVA's or the counterparty's credit rating as obtained from Moody's. For companies that do not have an observable credit rating, TVA uses internal analysis to assign a comparable rating to the counterparty. TVA discounts each financial instrument using the historical default rate (as reported by Moody's for CY 1983 to CY 2024) for companies with a similar credit rating over a time period consistent with the remaining term of the contract. The application of CVAs resulted in a less than $ 1 million decrease in the fair value of assets and a $ 3 million decrease in the fair value of liabilities at September 30, 2025. Fair Value Measurements The following tables set forth by level, within the fair value hierarchy, TVA's financial assets and liabilities that were measured at fair value on a recurring basis at September 30, 2025 and 2024. Financial assets and liabilities have been classified in their entirety based on the lowest level of input that is significant to the fair value measurement. TVA's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the determination of the fair value of the assets and liabilities and their classification in the fair value hierarchy levels. 124 Table of Contents Fair Value Measurements At September 30, 2025 (in millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Investments Equity securities $ 844 $ — $ — $ 844 Government debt securities (1)(2) 423 50 — 473 Corporate debt securities (3) — 411 — 411 Mortgage and asset-backed securities — 40 — 40 Institutional mutual funds 367 — — 367 Forward debt securities contracts — 16 — 16 Cash equivalents and other short-term investments (2)(4) 111 163 — 274 Private equity funds measured at net asset value (5) — — — 875 Private real asset funds measured at net asset value (5) — — — 467 Private credit funds measured at net asset value (5) — — — 278 Commingled funds measured at net asset value (5) — — — 1,528 Total investments 1,745 680 — 5,573 Commodity contract derivatives — 16 — 16 Commodity derivatives under the FHP — 8 — 8 Total $ 1,745 $ 704 $ — $ 5,597 Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities Currency swaps (6) $ — $ 115 $ — $ 115 Interest rate swaps — 698 — 698 Commodity contract derivatives — 6 — 6 Commodity derivatives under the FHP — 65 — 65 Total $ — $ 884 $ — $ 884 Notes (1) Includes obligations of government-sponsored entities. (2) There are $ 423 million of U.S. Treasury securities in Level 1 Government debt securities and $ 111 million of U.S. Treasury securities in Level 1 Cash equivalents and other short-term investments for a total of $ 534 million of U.S. Treasury securities within Level 1 of the fair value hierarchy. (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, 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. (6) TVA records currency swaps net of cash collateral received from or paid to the counterparty, to the extent such amount is not recorded in Accounts payable and accrued liabilities. See Note 16 — Risk Management Activities and Derivative Transactions — Offsetting of Derivative Assets and Liabilities . 125 Table of Contents Fair Value Measurements At September 30, 2024 (in millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Investments Equity securities $ 770 $ — $ — $ 770 Government debt securities (1)(2) 400 57 — 457 Corporate debt securities (3) — 378 — 378 Mortgage and asset-backed securities — 43 — 43 Institutional mutual funds 342 — — 342 Forward debt securities contracts — 11 — 11 Cash equivalents and other short-term investments (2)(4) 95 183 — 278 Private equity funds measured at net asset value (5) — — — 738 Private real asset funds measured at net asset value (5) — — — 432 Private credit funds measured at net asset value (5) — — — 219 Commingled funds measured at net asset value (5) — — — 1,300 Total investments 1,607 672 — 4,968 Commodity contract derivatives — 7 — 7 Total $ 1,607 $ 679 $ — $ 4,975 Quoted Prices in Active Markets for Identical Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Liabilities Currency swaps (6) $ — $ 116 $ — $ 116 Interest rate swaps — 840 — 840 Commodity contract derivatives — 5 — 5 Commodity derivatives under the FHP — 161 — 161 Total $ — $ 1,122 $ — $ 1,122 Notes (1) Includes obligations of government-sponsored entities. (2) There are $ 400 million of U.S. Treasury securities in Level 1 Government debt securities and $ 95 million of U.S. Treasury securities in Level 1 Cash equivalents and other short-term investments for a total of $ 495 million of U.S. Treasury securities within Level 1 of the fair value hierarchy. (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. 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 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. (6) TVA records currency swaps net of cash collateral received from or paid to the counterparty, to the extent such amount is not recorded in Accounts payable and accrued liabilities. See Note 16 — Risk Management Activities and Derivative Transactions — Offsetting of Derivative Assets and Liabilities . 126 Table of Contents Other Financial Instruments Not Recorded at Fair Value TVA uses the methods and assumptions described below to estimate the fair value of each significant class of financial instruments. The fair value of the financial instruments held at September 30, 2025 and 2024, may not be representative of the actual gains or losses that will be recorded when these instruments mature or are called or presented for early redemption. The estimated values of TVA's financial instruments not recorded at fair value at September 30, 2025 and 2024, were as follows: Estimated Values of Financial Instruments Not Recorded at Fair Value (in millions) At September 30, 2025 At September 30, 2024 Valuation Classification Carrying Amount Fair Value Carrying Amount Fair Value EnergyRight ® receivables, net (including current portion) Level 2 $ 57 $ 57 $ 56 $ 56 Loans and other long-term receivables, net (including current portion) Level 2 86 80 105 99 EnergyRight ® financing obligations (including current portion) Level 2 66 74 66 74 Membership interests of VIEs subject to mandatory redemption (including current portion) Level 2 16 18 17 19 Long-term outstanding power bonds, net (including current maturities) Level 2 21,831 21,967 18,889 19,416 Long-term debt of VIEs, net (including current maturities) Level 2 1,681 1,696 934 966 The carrying values of Cash and cash equivalents, Restricted cash and cash equivalents, Accounts receivable, net, and Short-term debt, net approximate their fair values. The fair value for loans and other long-term receivables is estimated by determining the present value of future cash flows using a discount rate equal to lending rates for similar loans made to borrowers with similar credit ratings and for similar remaining maturities, where applicable. The fair value of long-term debt and membership interests of VIEs subject to mandatory redemption is estimated by determining the present value of future cash flows using current market rates for similar obligations, giving effect to credit ratings and remaining maturities. 127 Table of Contents 18. Revenue Revenue from Sales of Electricity TVA's revenue from contracts with customers is primarily derived from the generation and sale of electricity to its customers and is included in Revenue from sales of electricity on the Consolidated Statements of Operations. Electricity is sold primarily to LPCs for distribution to their end-use customers. In addition, TVA sells electricity to directly served industrial companies, federal agencies, and others. 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. TVA recognizes revenue when the customer takes possession of the power at the delivery point. For power sales, the performance obligation to deliver power is satisfied in a series over time because the sales of electricity over the term of the customer contract are a series of distinct goods that are substantially the same and have the same pattern of transfer to the customer. TVA has no continuing performance obligations subsequent to delivery. Using the output method for revenue recognition provides a faithful depiction of the transfer of electricity as customers obtain control of the power and benefit from its use at delivery. Additionally, TVA has an enforceable right to consideration for energy delivered at any discrete point in time and will recognize revenue at an amount that reflects the consideration to which TVA is entitled for the energy delivered. The amount of revenue is based on contractual prices approved by the TVA Board. Customers are invoiced monthly for power delivered as measured by meters located at the delivery points. The net transaction price is offset by certain credits available to customers that are known at the time of billing. Credits are designed to achieve objectives of the TVA Act and include items such as hydro preference credits for residential customers of LPCs, economic development credits to promote growth in the Tennessee Valley, wholesale bill credits to maintain long-term partnerships with LPCs, pandemic credits, and demand response credits allowing TVA to reduce industrial customer usage in periods of peak demand to balance system demand. The pandemic credits ended September 30, 2023. Payments are typically due within approximately one month of invoice issuance. Directly served customers Directly served customers, including industrial customers, federal agencies, and other customers, take power for their own consumption. Similar to LPCs, power is delivered to a delivery point, at which time the customer takes possession and TVA recognizes revenue. For all power sales, the performance obligation to deliver power is satisfied in a series over time since the sales of electricity over the term of the customer contract are a series of distinct goods that are substantially the same and have the same pattern of transfer to the customer. TVA has no continuing performance obligations subsequent to delivery. Using the output method for revenue recognition provides a faithful depiction of the transfer of electricity as customers obtain control of the power and benefit from its use at delivery. Additionally, TVA has an enforceable right to consideration for energy delivered at any discrete point in time and will recognize revenue at an amount that reflects the consideration to which TVA is entitled for the energy delivered. The amount of revenue is based on contractual prices approved by the TVA Board. Customers are invoiced monthly for power delivered as measured by meters located at the delivery points. The net transaction price is offset by certain credits available to customers that are known at the time of billing. Examples of credits include items such as economic development credits to promote growth in the Tennessee Valley and demand response credits allowing TVA to reduce industrial customer usage in periods of peak demand to balance system demand. Payments are typically due within approximately one month of invoice issuance. Other Revenue Other revenue consists primarily of wheeling and network transmission charges, sales of excess steam that is a by-product of power production, delivery point charges for interconnection points between TVA and the customer, REC sales, and certain other ancillary goods or services. 128 Table of Contents Disaggregated Revenues During 2025, revenues generated from TVA's electricity sales were $ 13.5 billion and accounted for virtually all of TVA's revenues. TVA's operating revenues by state for each of the last three years are detailed in the table below: Operating Revenues By State For the years ended September 30 (in millions) 2025 2024 2023 Alabama $ 1,995 $ 1,768 $ 1,731 Georgia 329 295 284 Kentucky 850 776 773 Mississippi 1,254 1,150 1,146 North Carolina 88 89 89 Tennessee 8,915 7,998 7,819 Virginia 52 47 46 Subtotal 13,483 12,123 11,888 Off-system sales 7 8 14 Revenue capitalized during pre-commercial plant operations (1) ( 4 ) ( 3 ) ( 3 ) Revenue from sales of electricity 13,486 12,128 11,899 Other revenue 186 186 155 Total operating revenues $ 13,672 $ 12,314 $ 12,054 Note (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: Operating Revenues by Customer Type For the years ended September 30 (in millions) 2025 2024 2023 Revenue from sales of electricity Local power companies $ 12,334 $ 11,138 $ 10,903 Industries directly served 1,017 868 864 Federal agencies and other 139 125 135 Revenue capitalized during pre-commercial plant operations (1) ( 4 ) ( 3 ) ( 3 ) Revenue from sales of electricity 13,486 12,128 11,899 Other revenue 186 186 155 Total operating revenues $ 13,672 $ 12,314 $ 12,054 Note (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. In 2019, the TVA Board approved a partnership agreement option that better aligns the length of LPC power contracts with TVA's long-term commitments. Under the partnership arrangement, the LPC power contracts automatically renew each year and have a 20-year termination notice. The partnership arrangements can be terminated under certain circumstances, including TVA's failure to limit rate increases to no more than 10 percent during any consecutive five-fiscal-year period, as more specifically described in the agreements. Participating LPCs receive benefits including a 3.1 percent wholesale bill credit in exchange for their long-term commitment, which enables TVA to recover its long-term financial commitments over a commensurate period. The total wholesale bill credits to LPCs participating in the Partnership Agreement were $ 231 million, $ 215 million, and $ 199 million, respectively, for the years ended September 30, 2025, 2024, and 2023. In 2020, TVA provided participating LPCs a flexibility option, named Generation Flexibility, that allows them to locally generate or purchase up to approximately five percent of their average total hourly energy sales over a certain time period in order to meet their individual customers' needs. Revised flexibility agreements were made available to LPCs in August 2023 which permit projects to be located anywhere in TVA's service area, either connected to the LPC distribution system or TVA's transmission system, and make it easier for LPCs to partner in projects. As of September 30, 2025, 148 LPCs had signed the Partnership Agreement with TVA, and 109 LPCs had signed a Power Supply Flexibility Agreement. 129 Table of Contents 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 year ended September 30, 2023, pandemic credits totaled $ 225 million. The pandemic credits ended September 30, 2023. The number of LPCs by contract arrangement, the revenues derived from such arrangements for 2025, and the percentage those revenues comprised of TVA's total operating revenues for 2025, are summarized in the table below: TVA Local Power Company Contracts At or for the year ended September 30, 2025 Contract Arrangements (1) Number of LPCs Revenue from Sales of Electricity to LPCs (in millions) Percentage of Total Operating Revenues 20-year termination notice 148 $ 10,636 77.8 % 5-year termination notice 5 1,698 12.4 % Total 153 $ 12,334 90.2 % Note (1) Ordinarily, the LPCs and TVA have the same termination notice period; however, in a contract with one of the LPCs with a five-year termination notice, TVA has a 10-year termination notice (which becomes a five-year termination notice if TVA loses its discretionary wholesale rate-setting authority). Certain LPCs have five-year termination notices or a shorter period if any act of Congress, court decision, or regulatory change requires or permits that election. TVA's two largest LPCs — Memphis Light, Gas and Water Division ("MLGW") and Nashville Electric Service ("NES") — have contracts with a five-year and a 20-year termination notice period, respectively. Sales to MLGW and NES accounted for nine percent and eight percent, respectively, of TVA's total operating revenues in 2025, 2024, and 2023. Contract Balances Contract assets represent an entity's right to consideration in exchange for goods and services that the entity has transferred to customers. TVA did not have any material contract assets at September 30, 2025. Contract liabilities represent an entity's obligations to transfer goods or services to customers for which the entity has received consideration (or an amount of consideration is due) from the customers. These contract liabilities are primarily related to upfront consideration received prior to the satisfaction of the performance obligation. See Economic Development Incentives below and Note 13 — Other Long-Term Liabilities — Long-Term Deferred Revenue . Economic Development Incentives. Under certain economic development programs TVA offers incentives to existing and potential power customers in targeted business sectors that make multi-year commitments to invest in the Tennessee Valley. TVA records those incentives as reductions of revenue. Incentives recorded as a reduction to revenue were $ 321 million, $ 318 million, and $ 330 million for 2025, 2024, and 2023, respectively. Incentives that have been approved but have not been paid are recorded in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. At September 30, 2025 and 2024, the outstanding unpaid incentives were $ 193 million and $ 187 million, respectively. Incentives that have been paid out may be subject to claw back if the customer fails to meet certain program requirements. 19. Other Income, Net Income and expenses not related to TVA's operating activities are summarized in the following table: Other Income, Net For the years ended September 30 (in millions) 2025 2024 2023 Interest income $ 52 $ 42 $ 34 External services 28 17 15 Gains (losses) on investments 14 23 13 Miscellaneous ( 2 ) ( 11 ) ( 1 ) Total other income, net $ 92 $ 71 $ 61 130 Table of Contents 20. Supplemental Cash Flow Information 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, 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. Excluded from the Consolidated Statements of Cash Flows for the year ended September 30, 2024, were non-cash investing and financing activities of $ 230 million primarily related to two finance leases. There was a $ 56 million lease asset and lease liability recorded as a result of a new finance lease entered into in May 2024. In addition, there was a $ 163 million lease liability and a $ 179 million lease asset recorded as a remeasurement of an existing lease due to change in lease term. There are no material finance leases that were entered into during the years ended September 30, 2025 and 2023. See Note 9 — Leases for further information regarding TVA's finance leases. Cash flows from swap contracts that are accounted for as hedges are classified in the same category as the item being hedged or on a basis consistent with the nature of the instrument. 21. Benefit Plans 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"). Overview of Plans and Benefits Retirement Plans. The participants in the pension plan receive either a traditional final average pay pension or a cash balance pension. The traditional pension benefit is based on the participant's creditable service, average monthly salary for the participant's highest three consecutive years of eligible compensation, and a pension factor based on the participant's age and years of service, less a Social Security offset. The cash balance pension benefit is based on pay and interest credits accumulated in the participant's account and the participant's age. Participants in the pension plan are also eligible to receive 401(k) plan matching contributions, may be eligible to receive 401(k) plan non-elective contributions, and may be eligible to make after-tax contributions of up to $ 10,000 per year to the pension plan, which at the election of the participant are invested in either the fixed fund, which receives a fixed interest rate set forth in the plan, or the variable fund, which receives a rate of return based on an S&P 500 index fund. Participants in the pension plan may also become eligible for a supplemental pension benefit based on age and years of service at retirement, which is provided to help offset the cost of retiree medical insurance. Employees first hired on or after July 1, 2014, are participants in the 401(k) plan only and receive both non-elective and matching contributions to their accounts in the 401(k) plan. 401(k) Plan . Under the 401(k) plan, the non-elective and matching contributions TVA makes to participant accounts depends on the employee's hire date, years of service, and individual elections. Non-elective employer contributions for eligible participants range from three percent to six percent and matching employer contributions range from 1.5 percent to six percent. TVA recognized 401(k) contribution costs of $ 124 million, $ 116 million, and $ 105 million during 2025, 2024, and 2023, respectively. Supplemental Executive Retirement 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. 131 Table of Contents Other Post-Retirement Benefits. TVA sponsors two unfunded post-retirement benefit plans that provide for non-vested contributions toward the cost of certain eligible retirees' medical coverage. The first plan covers only certain retirees and surviving dependents who do not qualify for TVARS benefits, including the supplemental pension benefit. The second plan is designed to place a limit on the out-of-pocket amount certain eligible retirees pay for medical coverage and provides a credit based on years of TVA service and monthly base pension amount, reduced by any TVARS supplemental pension benefits or any TVA contribution from the first plan, described above. In January 2017, TVA began providing all Medicare-eligible retirees and spouses Medicare supplement coverage through a private exchange. Transition to the exchange did not affect any TVARS supplemental benefits for eligible retirees, and the credit continues to be calculated in the same manner as before. Other Post-Employment Benefits. TVA employees injured in work-related incidents are covered by the workers' compensation program for federal employees administered through the Department of Labor by the Office of Workers' Compensation Programs in accordance with the provisions of FECA. FECA provides compensation and medical benefits to federal employees for permanent and temporary disability due to employment-related injury or disease. Accounting Mechanisms Regulatory Accounting. TVA has classified all amounts related to unrecognized prior service costs/(credits), net actuarial gains or losses, and the funded status as regulatory assets or liabilities as such amounts are probable of collection in future rates. Additionally, TVA recognizes pension costs as regulatory assets or regulatory liabilities to the extent that the amount calculated under U.S. GAAP as pension expense differs from the amount TVA contributes to the pension plan as pension plan contributions. As a result of plan design changes, future contributions are expected to exceed the expense calculated under U.S. GAAP. Accordingly, TVA discontinued this regulatory accounting practice as all such deferred costs were recovered as of September 30, 2023. Cost Method. TVA uses the projected unit credit cost method to determine the service cost and the projected benefit obligation for retirement, termination, and ancillary benefits. Under this method, a "projected accrued benefit" is calculated at the beginning of the year and at the end of the year for each benefit that may be payable in the future. The "projected accrued benefit" is based on the plan's accrual formula and upon service at the beginning or end of the year, but it uses final average compensation, social security benefits, and other relevant factors projected to the age at which the employee is assumed to leave active service. The projected benefit obligation is the actuarial present value of the "projected accrued benefits" at the beginning of the year for employed participants and is the actuarial present value of all benefits for other participants. The service cost is the actuarial present value of the difference between the "projected accrued benefits" at the beginning and end of the year. Amortization of Net Gain or Loss. TVA utilizes the corridor approach for gain/loss amortization. Differences between actuarial assumptions and actual plan results are deferred and amortized into periodic cost only when the accumulated differences exceed 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. If necessary, the excess is amortized over the average future expected working lifetime of participants expected to receive benefits, which is approximately 10 years for the pension plan and 15 years for the post-retirement plans. Amortization of Prior Service Cost/(Credit). Amortization of net prior service cost/(credit) resulting from a plan change is included as a component of period expense in the year first recognized and every year thereafter until it is fully amortized. The increase or decrease in the benefit obligation due to the plan change is amortized over the average remaining service period of participating employees expected to receive benefits under the plan. The pension and post-retirement plans currently have prior service costs/(credits) from plan changes made in 2016 and 2018, with remaining amortization periods ranging from two to four years. However, when a plan change reduces the benefit obligation, existing positive prior service costs are reduced or eliminated starting with the earliest established before a new prior service credit base is established. Asset Method . TVA's asset method calculates a market-related value of assets ("MRVA") that recognizes realized and unrealized investment gains and losses over a three-year smoothing period to decrease the volatility of annual net periodic pension benefit costs. The MRVA is used to determine the expected return on plan assets, a component of net periodic pension benefit cost. The difference in the expected return on the MRVA and the actual return on the fair value on plan assets is recognized as an actuarial (gain)/loss in the pension benefit obligation at September 30. However, the MRVA has no impact on the fair value of plan assets measured at September 30. 132 Table of Contents Obligations and Funded Status The changes in plan obligations, assets, and funded status for the years ended September 30, 2025 and 2024, were as follows: Obligations and Funded Status For the years ended September 30 (in millions) 859,400,000 Pension Benefits Other Post-Retirement Benefits 867,300,000 2025 2024 2025 2024 Change in benefit obligation Benefit obligation at beginning of year $ 11,002 $ 10,099 $ 353 $ 347 Service cost 32 29 11 11 Interest cost 526 579 17 21 Plan participants' contributions 3 3 — — Collections (1) — — 12 12 Actuarial (gain) loss ( 457 ) 1,059 1.1 ( 67 ) ( 4 ) Curtailments (2) ( 1 ) — — — Special/contractual termination benefits (3) — — 1 — Net transfers (to) from variable fund/401(k) plan 2 5 — — Expenses paid ( 7 ) ( 6 ) — — Benefits paid ( 799 ) ( 766 ) ( 36 ) ( 34 ) Benefit obligation at end of year 10,301 11,002 291 353 Change in plan assets Fair value of net plan assets at beginning of year 8,673 8,129 — — Actual return on plan assets 412 1,004 — — Plan participants' contributions 3 3 — — Collections (1) — — 12 12 Net transfers (to) from variable fund/401(k) plan 2 5 — — Employer contributions 310 304 24 22 Expenses paid ( 7 ) ( 6 ) — — Benefits paid ( 799 ) ( 766 ) ( 36 ) ( 34 ) Fair value of net plan assets at end of year 8,594 8,673 — — Funded status $ ( 1,707 ) $ ( 2,329 ) $ ( 291 ) $ ( 353 ) Note (1) Collections include retiree contributions as well as provider discounts and rebates. (2) The 2025 pension obligation plan curtailment gain is a result of the amendments to the TVA SERP in which participants ceased accruing new benefits effective September 30, 2025. This reduced the projected benefit obligation by $ 1 million. (3) Special/contractual termination benefits for certain eligible employees related to TVA's restructuring activities. For 2025, the other post-retirement plan recognized a loss that increased the obligation by $ 1 million as a result of special/contractual termination benefits for certain eligible employees related to TVA’s restructuring activities. See Note 3 — Restructuring . For 2025, the $ 457 million pension benefit obligation actuarial gain was primarily due to the increase in the discount rate from 4.95 percent to 5.47 percent, which decreased the liability by $ 514 million. These gains were primarily offset by a $ 39 million actuarial loss due to observed plan experience and an $ 18 million actuarial loss from assumption changes due to higher Cost of Living Adjustment ("COLA") and higher interest crediting rates than previously assumed. For 2024, the $ 1.1 billion pension benefit obligation actuarial loss was primarily due to the decrease in the discount rate from 5.95 percent to 4.95 percent, which increased the liability by $ 981 million. In addition, TVA recognized a $ 46 million actuarial loss due to higher COLA and higher interest crediting rates than previously assumed, and a $ 37 million actuarial loss due to observed plan experience. These losses were offset by a $ 5 million actuarial gain due to mortality assumption changes. The other post-retirement actuarial gain for 2025 decreased the benefit obligation by $ 67 million. TVA recognized a $ 24 million actuarial gain from the increase in the discount rate from 5.00 percent to 5.62 percent. In addition, TVA recognized a $ 28 million gain due to the change in the post-Medicare health care cost trend rate due to the Medicare supplement insurance premiums on the private exchange escalating at a lower rate than previously assumed. Additionally, TVA recognized an 133 Table of Contents $ 18 million actuarial gain to reflect changes in the observed and anticipated pre-Medicare per capita claims costs and contributions, partially offset by a $ 3 million actuarial loss primarily due to higher claims costs for 2025 than previously assumed. The other post-retirement actuarial gain for 2024 decreased the benefit obligation by $ 4 million. TVA recognized a $ 30 million actuarial gain as a result of updating the pre-Medicare health care cost trend rates to reflect observed and anticipated plan experience. Based upon results obtained from a study on post-retirement experience conducted in 2024, TVA recognized a $ 13 million actuarial gain due to the adoption of a retiree persistency assumption and a $ 2 million actuarial gain related to changes in the withdrawal assumption rates. In addition, TVA recognized a $ 2 million gain due to observed plan experience. These gains were partially offset by a $ 43 million actuarial loss from the decrease in the discount rate from 6.05 percent to 5.00 percent. Amounts related to these benefit plans recognized on TVA's Consolidated Balance Sheets consist of regulatory assets and liabilities that have not been recognized as components of net periodic benefit cost at September 30, 2025 and 2024, and the funded status of TVA's benefit plans, which are included in Accounts payable and accrued liabilities and Post-retirement and post-employment benefit obligations: Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions) Pension Benefits Other Post-Retirement Benefits 2025 2024 2025 2024 Regulatory assets (liabilities) $ 1,531 $ 1,979 $ ( 131 ) $ ( 81 ) Accounts payable and accrued liabilities ( 9 ) ( 6 ) ( 17 ) ( 20 ) Pension and post-retirement benefit obligations (1) ( 1,698 ) ( 2,323 ) ( 274 ) ( 333 ) Note (1) The table above excludes $ 208 million of post-employment benefit costs and $ 3 million of RP costs at September 30, 2025, and $ 230 million of post-employment benefit costs and $ 1 million of RP costs at September 30, 2024 that are recorded in Post-retirement and post-employment benefit obligations on the Consolidated Balance Sheets. Unrecognized amounts included in regulatory assets or liabilities yet to be recognized as components of accrued benefit cost at September 30, 2025 and 2024, consisted of the following: Post-Retirement Benefit Costs Deferred as Regulatory Assets (Liabilities) At September 30 (in millions) Pension Benefits Other Post-Retirement Benefits 2025 2024 2025 2024 Unrecognized prior service credit $ ( 158 ) $ ( 247 ) $ ( 25 ) $ ( 42 ) Unrecognized net loss (gain) 1,689 2,226 ( 106 ) ( 39 ) Total regulatory assets (liabilities) $ 1,531 $ 1,979 $ ( 131 ) $ ( 81 ) Information for the pension projected benefit obligation ("PBO") in excess of plan assets and other post-retirement accumulated postretirement benefit obligation ("APBO") has been disclosed in the Obligations and Funded Status table above. The following table provides the pension plan accumulated benefit obligation ("ABO") in excess of plan assets. The other post-retirement plans are unfunded or have no plan assets. Accumulated Benefit Obligations in Excess of Plan Assets At September 30 (in millions) 2025 2024 Accumulated benefit obligation $ 10,278 $ 10,971 Fair value of net plan assets 8,594 8,673 134 Table of Contents The components of net periodic benefit cost for the years ended September 30, 2025, 2024, and 2023 were as follows: Components of Net Periodic Benefit Cost (1) For the years ended September 30 (in millions) Pension Benefits Other Post-Retirement Benefits 2025 2024 2023 2025 2024 2023 Service cost $ 32 $ 29 $ 32 $ 11 $ 11 $ 10 Interest cost 526 579 568 17 21 18 Expected return on plan assets ( 505 ) ( 494 ) ( 492 ) — — — Amortization of prior service credit ( 89 ) ( 89 ) ( 88 ) ( 17 ) ( 17 ) ( 17 ) Recognized net actuarial loss (gain) 173 99 135 ( 1 ) ( 1 ) ( 2 ) Total net periodic benefit cost 137 124 155 10 14 9 Special/contractual termination benefits (2) — — — 1 — — Amount expensed due to actions of regulator — — 77 — — — Total net periodic benefit cost $ 137 $ 124 $ 232 $ 11 $ 14 $ 9 Note (1) The components of total benefit cost other than the service cost component are included in Other net periodic benefit cost on the Consolidated Statements of Operations. (2) Special/contractual termination benefits for certain eligible employees related to TVA's restructuring activities. See Note 3 — Restructuring . Plan Assumptions Plan assumptions utilized to determine benefit obligations and net periodic benefit costs include discount rates, projected health care cost trend rates, COLAs, expected long-term rate of return on plan assets, rate of increase in future compensation levels, retirement rates, expected timing and form of payments, and mortality rates, of which certain key assumptions are noted below. Every five years, a formal actuarial experience study that compares assumptions to the actual experience is conducted. Additional ad-hoc experience studies are performed as needed to review recent experience and validate recommended changes to the actuarial assumptions used based upon TVA's latest experience study in 2023. Actuarial Assumptions Utilized to Determine Benefit Obligations at September 30 Pension Benefits Other Post-Retirement Benefits 2025 2024 2025 2024 Discount rate 5.47 % 4.95 % 5.62 % 5.00 % Average rate of compensation increase 3.97 % 4.01 % N/A N/A Weighted average interest crediting rate 5.11 % 5.13 % N/A N/A Cost of living adjustment (COLA) (1) 2.00 % 2.00 % 2.00 % 2.00 % Pre-Medicare eligible per capita claim costs Current health care cost trend rate N/A N/A 7.75 % 7.25 % Ultimate health care cost trend rate N/A N/A 5.00 % 5.00 % Year ultimate trend rate is reached N/A N/A 2036 2034 Pre-Medicare eligible per capita contributions Current health care cost trend rate N/A N/A 7.75 % 7.25 % Ultimate health care cost trend rate N/A N/A 5.00 % 5.00 % Year ultimate trend rate is reached N/A N/A 2036 2034 Post-Medicare eligible Current health care cost trend rate N/A N/A — % — % Ultimate health care cost trend rate N/A N/A 4.00 % 4.00 % Year ultimate trend rate is reached N/A N/A 2029 2026 Note (1) The COLA assumption rate is the ultimate long-term rate. The CY rate for 2026 is assumed to be 2.49 percent, and for years thereafter the ultimate rate is used. 135 Table of Contents Actuarial Assumptions Utilized to Determine Net Periodic Benefit Cost for the Years Ended September 30 (1) Pension Benefits Other Post-Retirement Benefits 2025 2024 2023 2025 2024 2023 Discount rate 4.95 % 5.95 % 5.60 % 5.00 % 6.05 % 5.65 % Expected return on plan assets (2) 6.50 % 6.50 % 6.50 % N/A N/A N/A Weighted average interest crediting rate 5.11 % 5.13 % 5.14 % N/A N/A N/A Cost of living adjustment (COLA) (3) 2.00 % 2.00 % 2.00 % 2.00 % 2.00 % 2.00 % Average rate of compensation increase 3.96 % 4.01 % 3.28 % N/A N/A N/A Pre-Medicare eligible per capita claims costs Current health care cost trend rate N/A N/A N/A 7.25 % 7.50 % 7.00 % Ultimate health care cost trend rate N/A N/A N/A 5.00 % 5.00 % 5.00 % Year ultimate trend rate is reached N/A N/A N/A 2034 2034 2031 Pre-Medicare eligible per capita contributions Current health care cost trend rate N/A N/A N/A 7.25 % 5.00 % 5.00 % Ultimate health care cost trend rate N/A N/A N/A 5.00 % 5.00 % 5.00 % Year ultimate trend rate is reached N/A N/A N/A 2034 2022 2022 Post-Medicare eligible Current health care cost trend rate N/A N/A N/A — % — % — % Ultimate health care cost trend rate N/A N/A N/A 4.00 % 4.00 % 4.00 % Year ultimate trend rate is reached N/A N/A N/A 2026 2026 2026 Notes (1) The actuarial assumptions used to determine the benefit obligations at September 30 of each year are subsequently used to determine net periodic benefit cost for the following year except the assumptions rate of compensation increase and weighted average interest crediting rate. (2) The actual return on assets for 2025, 2024, and 2023 was 4.90 percent, 12.72 percent, and 6.13 percent, respectively. (3) The COLA assumption rate is the ultimate rate. The actual CY rate is used in determining the expense, and for years thereafter the ultimate rate is used. Discount Rate. In selecting the assumed discount rate, TVA reviews market yields on high-quality corporate debt and endeavors to match, through the use of a hypothetical bond portfolio, instrument maturities with the maturities of its pension obligations in accordance with the prevailing accounting standards. The selected bond portfolio is derived from a universe of high quality corporate bonds of Aa-rated quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan's projected benefit payments discounted at this rate with the market value of the bonds selected. Expected Return on Plan Assets . The qualified defined benefit pension plan is the only plan that is funded with qualified plan assets. The expected rate of return is based on annual studies performed by third-party professional investment consultants. In determining the expected long-term rate of return on pension plan assets, TVA uses a process that incorporates actual historical asset class returns and an assessment of expected future performance and takes into consideration external actuarial advice, the current outlook on capital markets, the asset allocation policy, and the anticipated investment expenses and impact of active management. Asset allocations are periodically updated using the pension plan asset/liability studies and are part of the determination of the estimates of long-term rates of return. The TVARS asset allocation policy diversifies plan assets across multiple asset classes so as to minimize the risk of large losses. The asset allocation policy is designed to be responsive to changes in the funded status of TVARS. In June 2025, the TVARS Board approved a new asset allocation, but had no changes to the 6.50 percent expected return on assets assumption adopted in 2022. Compensation Increases . Assumptions related to compensation increases are based upon the latest TVA compensation experience study performed in 2023. Future compensation is assumed to likely increase at rates between 3.00 percent and 5.50 percent per year, depending upon the employee's age, and is used to determine the benefit obligations and net periodic benefit cost. The average assumed compensation increase is based upon the current active participants. Mortality. The mortality assumption is comprised of a base table that represents the current future life expectancy adjusted by an improvement scale to project future improvements in life expectancy. TVA's mortality assumptions are based upon actuarial projections in combination with studies of the actual mortality experience of TVA's pension and post-retirement benefit plan participants while taking into consideration the published Society of Actuaries ("SOA") mortality table and projection scale at September 30, 2025. The following mortality assumptions were used to determine the benefit obligations for the pension and other post-retirement benefit plans at September 30, 2025, 2024, and 2023. Assumptions used to determine year-end benefit obligations are the assumptions used to determine the subsequent year's net periodic benefit costs. 136 Table of Contents Mortality Assumptions At September 30 2025 2024 2023 Mortality table PRI-2012 Upper Quartile table (adjusted) PRI-2012 Upper Quartile table (adjusted) PRI-2012 Upper Quartile table (adjusted) Improvement scale MP-2021 (modified) MP-2021 (modified) MP-2021 (modified) Health Care Cost Trends. The health care cost trend rates are assumptions about the annual rate of changes in the cost of health care benefits currently provided by the post-retirement benefit plan. In establishing health care cost trend rates, TVA reviews actual recent cost trends and projected future trends considering health care inflation, changes in health care utilization, and changes in plan benefits and premium experience. Cost of Living Adjustment. COLAs are an increase in the benefits for eligible retirees to help maintain the purchasing power of benefits as consumer prices increase. Eligible retirees receive COLAs on pension and supplemental benefits in January based on a formula linked to the Consumer Price Index for All Urban Consumers ("CPI-U") following any year in which the calculation is at least one percent. Increases in COLA will be the percentage change in average CPI-U for the current 12-month period (November - October) compared to the average CPI-U for the previous 12-month period (November - October) for which a COLA was given, less 0.25 percent, with a 6.00 percent cap for any one year. TVA's COLA assumption is derived from long-term expectations of the expected future rate of inflation, based upon capital market assumptions, economic forecasts, and the Federal Reserve policy. The actual CY COLA and the long- term COLA assumption are used to determine the benefit obligation at September 30 and the net periodic benefit costs for the following fiscal year. The actual CY COLAs for 2025, 2024, and 2023 were 2.77 percent, 4.44 percent, and 6.00 percent, respectively. Sensitivity of Costs to Changes in Assumptions. The following chart reflects the sensitivity of pension cost to changes in certain actuarial assumptions: Sensitivity to Certain Changes in Pension Assumptions Actuarial Assumption Change in Assumption Impact on 2025 Pension Cost (in millions) Impact on 2025 Projected Benefit Obligation (in millions) Discount rate ( 0.25 ) % $ 12 $ 241 Rate of return on plan assets ( 0.25 ) % 19 N/A Cost of living adjustments 0.25 % 20 168 Each fluctuation above assumes that the other components of the calculation are held constant and excludes any impact for unamortized actuarial gains or losses. Plan Investments In June 2025, based on current market conditions and updated capital market assumptions, the asset allocation policy was modified to progress towards the goal of reducing risk and volatility in the TVARS investment portfolio. TVARS investments are being reallocated in a prudent manner over time to move toward the new asset allocation targets. Pursuant to the TVARS Rules and Regulations, any proposed changes in asset allocation that would change TVARS's assumed rate of investment return are subject to the review and veto of the TVA Board. The qualified pension plan assets are invested across fixed income, equities, and real assets. The TVARS asset allocation policy includes permissible deviations from target allocations, and action can be taken, as appropriate, to rebalance the plan's assets consistent with the asset allocation policy. At September 30, 2025 and 2024, the asset holdings of TVARS included the following (prior year amounts have been reclassified to conform to the current presentation): Asset Holdings of TVARS Plan Assets at September 30 Asset Category Target Allocation 2025 2024 Fixed Income 68 % 59 % 58 % Equity 20 % 23 % 25 % Real Assets 12 % 18 % 17 % Total 100 % 100 % 100 % 137 Table of Contents Fair Value Measurements The following table provides the fair value measurement amounts for assets held by TVARS at September 30, 2025: TVA Retirement System At September 30, 2025 (in millions) Total (1)(2) Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Equity securities $ 740 $ 727 $ — $ 13 Preferred securities 2 — — 2 Debt securities Corporate debt securities 770 — 764 6 Mortgage and asset-backed securities 523 — 520 3 Debt securities issued by U.S. Treasury 433 433 — — Debt securities issued by foreign governments 18 — 18 — Debt securities issued by state/local governments 17 — 17 — Commingled funds measured at net asset value (3) Equity 286 — — — Debt 1,845 — — — Institutional mutual funds 196 196 — — Cash equivalents and other short-term investments 181 10 171 — Private credit funds measured at net asset value (3) 1,175 — — — Private equity funds measured at net asset value (3) 1,290 — — — Private real asset funds measured at net asset value (3) 1,209 — — — Securities lending collateral 142 — 142 — Derivatives Futures 3 3 — — Swaps 7 — 7 — Total assets $ 8,837 $ 1,369 $ 1,639 $ 24 Notes (1) Excludes approximately $ 101 million in net payables associated with security purchases and sales and various other payables. (2) Excludes a $ 142 million payable for collateral on loaned securities in connection with TVARS's participation in securities lending programs. (3) 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 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 as the fair value of net plan assets. 138 Table of Contents The following table provides the fair value measurement amounts for assets held by TVARS at September 30, 2024: TVA Retirement System At September 30, 2024 (in millions) Total (1)(2) Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Equity securities $ 670 $ 668 $ — $ 2 Preferred securities 3 — 2 1 Debt securities Corporate debt securities 1,122 — 1,121 1 Mortgage and asset-backed securities 572 — 511 61 Debt securities issued by U.S. Treasury 543 543 — — Debt securities issued by foreign governments 19 — 19 — Debt securities issued by state/local governments 23 — 23 — Commingled funds measured at net asset value (3) Equity 245 — — — Debt 1,236 — — — Institutional mutual funds 180 180 — — Cash equivalents and other short-term investments 249 5 244 — Private credit funds measured at net asset value (3) 1,126 — — — Private equity funds measured at net asset value (3) 1,580 — — — Private real asset funds measured at net asset value (3) 1,150 — — — Securities lending collateral 235 — 235 — Derivatives Swaps 6 — 6 — Total assets $ 8,959 $ 1,396 $ 2,161 $ 65 Liabilities Derivatives Futures $ 1 $ 1 $ — $ — Swaps 3 — 3 — Total liabilities $ 4 $ 1 $ 3 $ — Notes (1) Excludes approximately $ 47 million in net payables associated with security purchases and sales and various other payables. (2) Excludes a $ 235 million payable for collateral on loaned securities in connection with TVARS's participation in securities lending programs. (3) 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 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 as the fair value of net plan assets. 139 Table of Contents The following table provides a reconciliation of beginning and ending balances of pension plan assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3): Fair Value Measurements Using Significant Unobservable Inputs (in millions) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance at September 30, 2023 $ 60 Net realized/unrealized gains (losses) 2 Purchases, sales, issuances, and settlements (net) 10 Transfers in and/or out of Level 3 ( 7 ) Balance at September 30, 2024 65 Net realized/unrealized gains (losses) 10 Purchases, sales, issuances, and settlements (net) ( 18 ) Transfers in and/or out of Level 3 ( 33 ) Balance at September 30, 2025 $ 24 The following descriptions of the valuation methods and assumptions used by the pension plan to estimate the fair value of investments apply to investments held directly by the pension plan. Third-party pricing vendors provide valuations for investments held by the pension plan in most instances, except for commingled, private credit, private equity, and private real asset funds which are priced at NAVs established by the investment managers. In instances where pricing is determined to be based on unobservable inputs, a Level 3 classification has been assigned. Certain securities priced by the investment manager using a proprietary fair value model with unobservable inputs have been classified as Level 3. Equity and Preferred Securities. Investments listed on either a national or foreign securities exchange or traded in the over-the-counter National Market System are generally valued each business day at the official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded and are classified as Level 1. Equity securities, including common stocks and preferred securities, classified as Level 2 may have been priced by dealer quote or using assumptions based on observable market data, such as yields on bonds from the same issuer or industry. Certain securities priced by the investment manager using unobservable inputs have been classified as Level 3. Corporate Debt Securities. Corporate bonds are valued based upon recent bid prices or the average of recent bid and asked prices when available (Level 2 inputs) and, if not available, they are valued through matrix pricing models. Matrix pricing, which is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 inputs). Certain securities priced by the investment manager using broker pricing or unobservable inputs have been classified as Level 3. Mortgage and Asset-Backed Securities. Residential mortgage-backed securities consist of collateralized mortgage obligations ("CMOs") and U.S. pass-through security pools related to government-sponsored enterprises. CMO pricing is typically based on either a volatility-driven, multidimensional, single-cash-flow stream model or an option-adjusted spread model. These models incorporate available market data such as trade information, dealer quotes, market color, spreads, bids, and offers. Pricing for government-sponsored enterprise securities, including the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the Government National Mortgage Association, is typically based on quotes from the To Be Announced ("TBA") market, which is highly liquid with multiple electronic platforms that facilitate the execution of trading between investors and broker/dealers. Prices from the TBA market are then compared against other live data feeds as well as input obtained directly from the dealer community. Most residential mortgage-backed securities are considered to be priced using Level 2 inputs because of the nature of their market-data-based pricing models. Certain securities priced by vendors using a single broker quote or unobservable inputs have been classified as Level 3. Commercial mortgage-backed and asset-backed securities are typically priced based on a single-cash-flow stream model, which incorporates available market data such as trade information, dealer quotes, market color, spreads, bids, and offers. Because of the market-data-based nature of such pricing models, these securities are typically classified as Level 2. Certain securities priced by investment managers using broker pricing or unobservable inputs have been classified as Level 3. Debt Securities Issued by U.S. Treasury. For U.S. Treasury securities, fair values reflect the closing price reported in the active market in which the security is traded (Level 1 inputs). Debt Securities Issued by Foreign Governments. Foreign government bonds and foreign government inflation-linked securities are typically priced based on proprietary discounted cash flow models, incorporating option-adjusted spread features 140 Table of Contents as appropriate. Debt securities issued by foreign governments are classified as Level 2 because of the nature of their market-data-based pricing models. Debt Securities Issued by State and Local Governments . Debt securities issued by state and local governments are typically priced using market-data-based pricing models, and are therefore classified as Level 2. These pricing models incorporate market data such as quotes, trading levels, spread relationships, and yield curves, as applicable. Commingled Funds . The pension plan invests in commingled funds, which include collective trusts, unit investment trusts, and similar investment funds that predominantly hold debt and/or equity securities as underlying assets. The pension plan's ownership consists of a pro rata share and not a direct ownership of an underlying investment. These commingled funds are valued at their closing NAVs (or unit value) per share as reported by the managers of the commingled funds and as supported by the unit prices of actual purchases and sale transactions occurring as of or close to the financial statement date. These funds have not been classified in the fair value hierarchy in accordance with FASB guidance issued in May 2015. The pension plan is invested in equity commingled funds, which can be categorized as either passively managed index funds or actively managed funds. The equity index funds seek to track the performance of a particular index by replicating its capitalization and characteristics. Passive fund benchmark indices include the Russell 1000 index and MSCI ACWI ex-U.S. index. The actively managed equity funds seek to outperform certain equity benchmarks through a combination of fundamental and technical analysis. Active funds select portfolio positions based upon their research. The pension plan is invested in debt commingled funds, which can be categorized as either passively managed index funds or actively managed funds. The pension plan's debt index fund invests in a diversified portfolio of fixed-income securities and derivatives of varying maturities to replicate the characteristics of the Bloomberg Barclays Capital U.S. TIPS. The fund seeks to track the total return of the Bloomberg Barclays Capital U.S. TIPS index. The actively managed debt funds seek to outperform certain fixed-income benchmarks through fundamental research and analysis. The funds invest in a diversified portfolio of fixed income securities and derivatives of varying maturities. Varying by strategy, fund objectives include achieving a positive relative total return through active credit selection and providing risk management through desired strategic exposures. The pension plan's investments in equity and debt commingled funds can generally be redeemed upon notification of the investment managers, with required notice periods varying from same-day to monthly. These investments do not have unfunded commitments. Institutional Mutual Funds . Investments in institutional mutual funds are valued at prices based on their NAV. Institutional mutual funds have daily published market prices that represent their NAV (or unit value) per share and are classified as Level 1. Cash Equivalents and Other Short-Term Investments and Certificates of Deposit . Cash equivalents and other short-term investments are highly liquid securities with maturities of less than three months and 12 months, respectively. These consist primarily of discount securities such as commercial paper, repurchase agreements, U.S. Treasury bills, and certain agency securities. These securities, as well as certificates of deposit, may be priced at cost, which approximates fair value due to the short-term nature of the instruments. Model based pricing which incorporates observable inputs may also be utilized. These securities are classified as Level 2. Active market pricing may be utilized for U.S. Treasury bills, which are classified as Level 1. Private Credit Funds . Private credit limited partnerships are reported at NAVs provided by the fund managers. These funds have not been classified in the fair value hierarchy in accordance with FASB guidance issued in May 2015. The private credit limited partnerships invest across direct lending, opportunistic credit, and distressed debt strategies. The limited partnerships generally make investments of senior secured first-lien loans, second-lien secured loans, asset-based loans, risk transfer loans, specialty finance loans, unitranche loans, and distressed debt opportunities to middle market private companies. The limited partnerships generally seek to obtain financial returns through high income potential and occasional equity upside. The limited partnerships generally have a term life of five to eight years and are diversified by sector and industry. Private Equity Funds. Private equity limited partnerships are reported at NAVs provided by the fund managers. These funds have not been classified in the fair value hierarchy in accordance with FASB guidance issued in May 2015. The private equity limited partnerships typically make longer-term investments in private companies and seek to obtain financial returns through long-term appreciation based on corporate stewardship, improved operating processes, and financial restructuring which may involve a merger or acquisition. Significant investment strategies include venture capital, buyout, mezzanine or subordinated debt, restructuring or distressed debt, and special situations. Venture capital partnerships consist of two main groupings. Early-stage venture capital partnerships invest in businesses still in the conceptual stage where products may not be fully developed and where revenues and/or profits may be several years away. Later-stage venture capital partnerships invest in more mature companies in need of growth or expansion capital. Buyout partnerships provide the equity capital for acquisition transactions either from a private seller or the public, which may represent the purchase of the entire company or a refinancing or recapitalization transaction where equity is invested. Mezzanine or subordinated debt partnerships 141 Table of Contents provide the intermediate capital between equity and senior debt in a buyout or refinancing transaction and typically own a security in the company that carries current interest payments as well as a potential equity interest in the company. Restructuring or distressed debt partnerships purchase opportunities generated by overleveraged or poorly managed companies. Special situation partnerships include organizations with a specific industry focus not covered by the other private equity subclasses or unique opportunities that fall outside the regular subclasses. The private equity funds have no investment withdrawal provisions prior to the termination of the partnership. Partnerships generally continue 10 to 14 years after the inception of the fund. The partnerships are generally subject to two to three one-year extensions at the discretion of the General Partner. Partnerships can generally be dissolved by an 80 percent vote in interest by all limited partners, with some funds requiring the occurrence of a specific event. Private Real Asset Investments. The pension plan's ownership in private real asset investments consists of a pro rata share and not a direct ownership of the underlying investments. The fair values of the pension plan's private real asset investments are estimated utilizing NAVs provided by the investment managers. These investments have not been classified in the fair value hierarchy in accordance with FASB guidance issued in May 2015. The investment strategies and methodologies utilized by the investment managers to calculate their NAVs are summarized as follows: The pension plan is invested in limited partnerships that invest in real estate securities, real estate partnerships, and direct real estate properties. This includes investments in office, multifamily, industrial, and retail investment properties in the U.S. and international markets. The investment strategy focuses on distressed, opportunistic, and value-added opportunities. Partnership investments also include mortgage and/or real estate-related fixed-income instruments and related securities. Investments are diversified by property type and geographic location. The pension plan is invested in two commingled funds that develop, renovate, and re-lease real estate properties to create value. Investments are predominantly in top tier real estate markets that offer deep liquidity. Property types include residential, office, industrial, hotel, retail, and land. Properties are diversified by geographic region within the U.S. domestic market. The plan is invested in a commingled fund that invests primarily in core, well-leased, operating real estate properties with a focus on income generation. Investments are diversified by property type with a focus on office, industrial, apartment, and retail. Properties are diversified within the U.S. with an overweight to major market and coastal regions. Fair value estimates of the underlying investments in these limited partnerships and commingled fund investments are primarily based upon property appraisal reports prepared by independent real estate appraisers within a reasonable amount of time following acquisition of the real estate and no less frequently than annually thereafter. The appraisals are based on one or a combination of three methodologies: cost of reproduction analysis, discounted cash flow analysis, and sales comparison analysis. Pricing for certain investments in mortgage-backed and asset-backed securities is typically based on models that incorporate observable inputs. The pension plan is invested in energy infrastructure partnerships that acquire essential, long-lived real assets in three main groupings. Upstream assets include oil and gas exploration, drilling, and acquisition. Midstream assets include storage, pipelines, gathering, processing, and transportation of energy commodities. Downstream assets include generation, distribution, and transmission facilities. Additionally, the pension plan is invested in infrastructure partnerships that target mid-sized operating infrastructure companies and/or assets with limited development and construction risk primarily in the energy, transportation and logistics, environmental, telecommunications, and social industries. The partnerships use one or more valuation techniques (e.g., the market approach, the income approach, or the cost approach) for which sufficient and reliable data is available. The use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market, and/or other risk factors. The pension plan is invested in a private real asset investment trust formed to make direct or indirect investments in commercial timberland properties. Pricing for these types of investments is based on comprehensive appraisals that are conducted shortly after initial purchase of properties and at three-year intervals thereafter. All appraisals are conducted by third-party timberland appraisal firms. Appraisals are based on either a sales comparison analysis or a discounted cash flow analysis. Securities Lending Collateral . Collateral held under securities lending arrangements is invested in highly liquid short-term securities, primarily repurchase agreements. The securities are often priced at cost, which approximates fair value due to the short-term nature of the instruments. These securities are classified as Level 2. Derivatives. The pension plan invests in a variety of derivative instruments. The valuation methodologies for these instruments are as follows: Futures . The pension plan enters into futures. The futures contracts are listed on either a national or foreign securities exchange and are generally valued each business day at the official closing price (typically the last reported sales price) on the exchange on which the security is primarily traded. The pricing is performed by third-party vendors. Since futures are priced by an exchange in an active market, they are classified as Level 1. 142 Table of Contents Options . The pension plan enters into purchased and written options. Options that are listed on either a national or foreign securities exchange are generally valued each business day at the official closing price (typically the last reported sales price) on the exchange on which the security is primarily traded. These options are classified as Level 1. Options traded over the counter and not on exchanges are priced by third-party vendors and are classified as Level 2. Swaps . The pension plan enters into various types of swaps. Credit default swaps are priced at market using models that consider cash flows, credit curves, recovery rates, and other factors. The pricing is performed by third-party vendors, and in some cases by clearing exchanges. Interest rate swap contracts are priced at market using forward rates derived from the swap curve, and the pricing is also performed by third-party vendors, and in some cases by clearing exchanges. Other swaps such as equity index swaps and variance swaps are priced by third-party vendors using market inputs such as spot rates, yield curves, and volatility. The pension plan's swaps are generally classified as Level 2 based on the observable nature of their pricing inputs. Foreign currency forwards . The pension plan enters into foreign currency forwards. All commitments are marked to market daily at the applicable translation rates, and any resulting unrealized gains or losses are recorded. Foreign currency forwards are priced by third-party vendors and are classified as Level 2. The valuation methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the TVARS Board believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Cash Flows Estimated Future Benefit Payments. The following table sets forth the estimated future benefit payments under the benefit plans. Estimated Future Benefits Payments At September 30, 2025 (in millions) Pension Benefits (1) Other Post-Retirement Benefits 2026 $ 827 $ 17 2027 826 17 2028 826 16 2029 819 16 2030 808 16 2031 - 2035 3,885 93 Note (1) Participants are assumed to receive the Fixed Fund in a lump sum in lieu of available annuity options allowed for certain grandfathered participants resulting in higher estimated pension benefits payments. Contributions . TVA made contributions to the pension plan of $ 300 million for 2025 and 2024. TVA has committed to make a minimum contribution of $ 300 million per year through 2036 or until the plan has reached and remained at 100 percent funded status under the actuarial rules applicable to TVARS. TVA made SERP contributions of $ 10 million and $ 4 million for 2025 and 2024, respectively. TVA made cash contributions to the other post-retirement benefit plans of $ 24 million (net of $ 5 million in rebates) and $ 22 million (net of $ 5 million in rebates) for 2025 and 2024, respectively. In addition, TVA recognized 401(k) contribution costs of $ 124 million and $ 116 million fo r the years ended September 30, 2025 and 2024, respectively. TVA expects to contribute $ 300 million to TVARS, $ 9 million to the SERP, and $ 17 million to the other post-retirement benefit plans in 2026 . Other Post-Employment Benefits Post-employment benefit cost estimates are revised to properly reflect changes in actuarial assumptions made at the end of each year. TVA utilizes a discount rate determined by reference to the U.S. Treasury Constant Maturities corresponding to the calculated average durations of TVA's future estimated post-employment claims payments. The use of a 4.16 percent discount rate resulted in the recognition of $ 3 million in expenses in 2025 and an unpaid benefit obligation of $ 233 million at September 30, 2025. The use of a 3.81 percent discount rate resulted in the recognition of approximately $ 21 million in expenses in 2024 and an unpaid benefit obligation of $ 258 million at September 30, 2024. The use of a 4.59 percent discount rate resulted in the recognition of approximately $( 3 ) million in expenses in 2023 and an unpaid benefit obligation of $ 266 million at September 30, 2023. The U.S. Department of Labor ("DOL") administers TVA's worker compensation program and invoices TVA annually for claims processed. 143 Table of Contents The decrease in the unpaid obligation at September 30, 2025, compared to the prior year was due primarily to the increase in the discount rate from 3.81 percent in 2024 to 4.16 percent in 2025 and a decrease in overall claims experience. The DOL billed TVA $ 25 million for 2025 claims due in October 2025. TVA estimated claims for 2026 are $ 24 million. The decrease in the unpaid obligation at September 30, 2024, compared to the prior year was due primarily to the decrease in overall claims experience offset by inflationary impacts on wage and medical costs and a decrease in the discount rate from 4.59 percent in 2023 to 3.81 percent in 2024. TVA paid $ 28 million for 2024 claims to the DOL in October 2024. The impact of inflation on wages, medical costs, and interest rates on the post-employment obligation depends on factors beyond TVA's knowledge or control, including the effects of supply chain disruptions and geographical tensions. The current portion which represents unpaid losses and administrative fees due are in Accounts payable and accrued liabilities. The long-term portion is recognized in Post-retirement and post-employment benefit obligations. Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions) 2025 2024 Accounts payable and accrued liabilities $ 25 $ 28 Post-retirement and post-employment benefit obligations 208 230 22 . Collaborative Arrangement In 2023, TVA, Ontario Power Generation, BWRX TCA sp. z.o.o., and GE Vernova Hitachi Nuclear Energy ("GVH") entered into a multi-party collaborative arrangement to advance the global deployment of the GVH BWRX-300 small modular reactor. GVH is responsible for standard design development. Under the agreement, TVA will contribute up to $ 93 million for design costs incurred by GVH through 2026. At the time feasibility is determined, TVA will have the right to use the design and may receive additional economic benefits. Payments pursuant to the agreement are recorded as research and development expense, which is reflected as Operating and maintenance expense on TVA's Consolidated Statements of Operations in the period incurred. TVA recorded $ 11 million and $ 41 million of expenses related to this agreement for the years ended September 30, 2025 and 2024, respectively. TVA also had a $ 6 million letter of credit posted under this arrangement at September 30, 2025. 23. Commitments and Contingencies Commitments Power Purchase Obligations. TVA has contracted with various independent power producers and LPCs for additional capacity to be made available to TVA. Several of these agreements have contractual minimum payments and are accounted for as either finance or operating leases. In total, these agreements provide 5,938 megawatts ("MW") of summer net capability. The remaining terms of the agreements range up to 23 years. Additionally, TVA has contracted with regional transmission organizations to reserve 3,750 MW of transmission service to support purchases from the market and certain PPAs. The remaining terms of these agreements range up to six years . TVA has recorded $ 696 million, $ 519 million, and $ 355 million of expense under these power purchase and transmission service agreements during 2025, 2024, and 2023, respectively. TVA has one power purchase agreement that was negotiated as part of arranging financing for the facility. At September 30, 2025, the non-lease portion of the commitment for each of the next five years and thereafter is shown below: 2026 2027 2028 2029 2030 Thereafter Unconditional purchase obligation $ 162 $ 162 $ 162 $ 162 $ 162 $ 242 Under federal law, TVA is obligated to purchase power from qualifying facilities (cogenerators and small power producers). As of September 30, 2025, there was a combined qualifying facility capacity of 281 MW from 1,344 different generation sources, from which TVA purchased power under this law. Unfunded Loan Commitments . At September 30, 2025, TVA had no commitments under unfunded loan commitments for 2026 through 2030. Other Commitments. See Note 9 — Leases , Note 12 — Variable Interest Entities , Note 15 — Debt and Other Obligations , and Note 21 — Benefit Plans for the obligations and commitments attributable to leases, VIEs and membership interests of VIEs subject to mandatory redemption, leaseback obligations, and the retirement plan, respectively. 144 Table of Contents Contingencies Nuclear Insurance . Section 170 of the Atomic Energy Act, commonly known as the Price-Anderson Act, provides a layered framework of financial protection to compensate for liability claims of members of the public for personal injury and property damages arising from a nuclear incident in the U.S. This financial protection consists of two layers of coverage. The primary level is private insurance underwritten by American Nuclear Insurers and provides public liability insurance coverage of $ 500 million for each nuclear power plant licensed to operate. If this amount is not sufficient to cover claims arising from a nuclear incident, the second level, Secondary Financial Protection, applies. Within the Secondary Financial Protection level, the licensee of each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident of fault, up to a maximum of approximately $ 166 million per reactor per incident. With TVA's seven reactors, the maximum total contingent obligation per incident is $ 1.2 billion. This retrospective premium is payable at a maximum rate currently set at approximately $ 25 million per year per nuclear incident per reactor. Currently, 95 reactors are participating in the Secondary Financial Protection program. In the event that a nuclear incident results in public liability claims, the primary level provided by American Nuclear Insurers combined with the Secondary Financial Protection should provide up to $ 16.3 billion in coverage. Federal law requires that each NRC power reactor licensee obtain property insurance from private sources to cover the cost of stabilizing and decontaminating a reactor and its station site after an accident. TVA carries property, decommissioning liability, and decontamination liability insurance from Nuclear Electric Insurance Limited ("NEIL") and European Mutual Association for Nuclear Insurance. The limits available for a loss are up to $ 2.1 billion for two of TVA's nuclear sites and up to $ 2.8 billion for the remaining site. Some of this insurance may require the payment of retrospective premiums up to a maximum of approximately $ 122 million. TVA purchases accidental outage (business interruption) insurance for TVA's nuclear sites from NEIL. In the event that an accident covered by this policy takes a nuclear unit offline or keeps a nuclear unit offline, NEIL will pay TVA, after a waiting period, an indemnity (a set dollar amount per week) with a maximum indemnity of $ 490 million per unit. This insurance policy may require the payment of retrospective premiums up to a maximum of approximately $ 50 million, but only to the extent the retrospective premium is deemed necessary by the NEIL Board of Directors to pay losses unable to be covered by NEIL's surplus. Decommissioning Costs. TVA recognizes legal obligations associated with the future retirement of certain tangible long-lived assets related primarily to nuclear generating plants, coal-fired generating plants, hydroelectric generating plants/dams, transmission structures, and other property-related assets. See Note 14 — Asset Retirement Obligations . Nuclear Decommissioning . Provision for decommissioning costs of nuclear generating units is based on options authorized by the NRC procedures to dismantle and decontaminate the facilities to meet the NRC criteria for license termination. At September 30, 2025, $ 4.0 billion, representing the discounted value of future estimated nuclear decommissioning costs, was included in nuclear AROs. The actual decommissioning costs may vary from the derived estimates because of, among other things, changes in current assumptions, such as the assumed dates of decommissioning, changes in regulatory requirements, changes in technology, and changes in the cost of labor, materials, and equipment. Utilities that own and operate nuclear plants are required to use different procedures in calculating nuclear decommissioning costs under GAAP than those that are used in calculating nuclear decommissioning costs when reporting to the NRC. The two sets of procedures produce different estimates for the costs of decommissioning primarily because of differences in the underlying assumptions. TVA bases its nuclear decommissioning estimates on site-specific cost studies. The most recent study was approved and implemented in September 2022. Site-specific cost studies are updated for each of TVA's nuclear units at least every five years. TVA maintains an NDT to provide funding for the ultimate decommissioning of its nuclear power plants. See Note 17 — Fair Value Measurements — Investment Funds . TVA monitors the value of its NDT and believes that, over the long term and before cessation of nuclear plant operations and commencement of decommissioning activities, adequate funds from investments and additional contributions, if necessary, will be available to support decommissioning. TVA's operating nuclear power units are licensed through various dates between 2033 - 2055, depending on the unit. It may be possible to extend the operating life of some of the units with approval from the NRC. See Note 11 — Regulatory Assets and Liabilities — Nuclear Decommissioning Costs and Note 14 — Asset Retirement Obligations . Non-Nuclear Decommissioning . At September 30, 2025, $ 6.4 billion, representing the discounted value of future estimated non-nuclear decommissioning costs, was included in non-nuclear AROs. This decommissioning cost estimate involves estimating the amount and timing of future expenditures and making judgments concerning whether or not such costs are considered a legal obligation. Estimating the amount and timing of future expenditures includes, among other things, making projections of the timing and duration of the asset retirement process and how costs will escalate with inflation. The actual decommissioning costs may vary from the derived estimates because of changes in current assumptions, such as the assumed dates of decommissioning, changes in regulatory requirements, changes in technology, and changes in the cost of labor, materials, and equipment. TVA updates its underlying assumptions for non-nuclear decommissioning AROs at least every five years. However, material changes in underlying assumptions that impact the amount and timing of undiscounted cash flows are continuously monitored and incorporated into ARO balances in the period identified. 145 Table of Contents TVA maintains an ART to help fund the ultimate decommissioning of its non-nuclear power assets. See Note 17 — Fair Value Measurements — Investment Funds . Estimates involved in determining if additional funding will be made to the ART include inflation rate, rate of return projections on the fund investments, and the planned use of other sources to fund decommissioning costs. See Note 11 — Regulatory Assets and Liabilities — Non-Nuclear Decommissioning Costs and Note 14 — Asset Retirement Obligations . Environmental Matters. TVA's generation activities, like those across the utility industry and in other industrial sectors, are subject to federal, state, and local environmental laws and regulations. Major areas of regulation affecting TVA's activities include air quality control, greenhouse gas ("GHG") emissions, water quality control, and management and disposal of solid and hazardous wastes. Regulations in these major areas continue to evolve. TVA has incurred, and expects to continue to incur, substantial capital and operating and maintenance costs to comply with evolving environmental requirements primarily associated with, but not limited to, the operation of TVA's coal-fired and natural gas-fired generating units in general and emissions of pollutants from those units. Failure to comply with environmental and safety requirements can result in enforcement actions and litigation, which can lead to the imposition of significant civil liability, including fines and penalties, criminal sanctions, and/or temporary or permanent closure of non-compliant facilities. Historical non-compliance can also lead to difficulty in renewing existing permits, as well as difficulty in obtaining permits to bring new generation facilities online. Other obstacles to renewal or permitting of new facilities include a proliferation of non-government organizations seeking to use litigation tools to drive up costs associated with, and delay or prevent permitting of, new fossil fuel facilities and related infrastructure in favor of renewable energy projects . Compliance with the 2015 CCR Rule required implementation of a groundwater monitoring program, additional engineering, evaluation of authorized closure methods, coordination with certain state authorities, and ongoing analysis at each TVA CCR unit. As further analyses are performed, including evaluation of monitoring results, there is the potential for additional costs for investigation and/or remediation. In addition, on May 8, 2024, EPA published its Legacy CCR Rule, which expands the scope of the existing regulatory requirements of the 2015 CCR Rule to include two additional classes of CCR units: Legacy SIs and CCRMUs. As a result of the enactment of the final rule, during 2024, TVA recorded additional estimated AROs and recorded a corresponding regulatory asset due to AROs being associated with closed sites and asset retirement costs having been fully depreciated. However, the amounts recorded are subject to various uncertainties, and actual amounts may differ materially based upon a number of factors, including, but not limited to, the outcome of legal challenges to the Legacy CCR Rule, ongoing evaluations of the number and scope of newly regulated units, determinations on final closure requirements and performance standards, and possible changes to the Legacy CCR Rule by EPA. See Note 14 — Asset Retirement Obligations . In May 2024, EPA also published (1) a final rule that establishes more stringent technology-based effluent limitations for four wastewater streams from coal-fired plants, (2) a rule that strengthens and updates the Mercury and Air Toxics Standards for electric generating units to reflect recent developments in control technologies, and (3) a rule that establishes GHG emission guidelines for existing coal-fired plants and GHG performance standards for new natural gas-fired power plants. These rules are all currently being reconsidered by EPA and are also all subject to legal challenges. If these rules move forward as written and the challenges are not successful, TVA would incur substantial costs to comply with the rules. On March 12, 2025, the EPA Administrator announced that EPA will reconsider 31 rules, including (1) regulations on power plants, (2) Mercury and Air Toxics Standards, (3) steam electric effluent limitation guidelines, (4) National Ambient Air Quality Standards for particulate matter, (5) regulations regarding regional haze, (6) the Good Neighbor Plan, and (7) CCR regulations. TVA cannot predict the outcome of such reevaluations or their impact on TVA's financial results or operations. Liability for releases, natural resource damages, and required cleanup of hazardous substances is primarily regulated by the federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), and other federal and parallel state statutes. In a manner similar to many other governmental entities, industries, and power systems, TVA has generated or used hazardous substances over the years. TVA operations at some facilities have resulted in releases of contaminants that TVA has addressed or is addressing consistent with state and federal requirements. At September 30, 2025 and 2024, TVA's estimated liability for required cleanup and similar environmental work for those sites for which sufficient information is available to develop a cost estimate was $ 8 million and $ 15 million, respectively, on a non-discounted basis, and was included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. Additionally, the potential inclusion of new hazardous substances under CERCLA and RCRA jurisdiction could significantly affect TVA's future liability for remediating historical releases. In August 2015, the Tennessee Department of Environment and Conservation ("TDEC") issued an order that includes an iterative process through which TVA and TDEC will identify and evaluate any CCR contamination risks and, if necessary, respond to such risks. TVA is also following a similar process pursuant to a consent order. At September 30, 2025 and 2024, TVA's estimated liability for costs associated with environmental remediation activities for the sites covered by these orders for which sufficient information is available to develop a cost estimate was approximately $ 319 million and $ 215 million , respectively, on a non-discounted basis and was included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. The current estimated time frame for work related to these remediation activities for which TVA has a cost estimate is through 2044. 146 Table of Contents Legal Proceedings From time to time, TVA is party to or otherwise involved in lawsuits, claims, proceedings, investigations, and other legal matters ("Legal Proceedings") that have arisen in the ordinary course of conducting TVA's activities. General. At September 30, 2025, TVA had accrued $ 11 million of probable losses with respect to Legal Proceedings. Of the accrued amount, $ 9 million is included in Other long-term liabilities and $ 2 million is included in Accounts payable and accrued liabilities. No assurance can be given that TVA will not be subject to significant additional claims and liabilities. If actual liabilities significantly exceed the estimates made, TVA's results of operations, liquidity, and financial condition could be materially adversely affected. Environmental Agreements . On April 14, 2011, TVA entered into two substantively similar agreements, one with the EPA and the other with Alabama, Kentucky, North Carolina, Tennessee, and three environmental advocacy groups (collectively, the "Environmental Agreements"). To resolve alleged New Source Review claims, TVA committed under the Environmental Agreements to, among other things, take now-completed actions regarding coal units and invest $ 290 million in certain TVA environmental projects. Of this amount, TVA had spent approximately $ 285 million as of September 30, 2025. Additionally, TVA holds restricted cash in an interest earning trust to fund the remaining project commitments. Any interest earned through the trust must also be spent on agreed upon environmental projects. The total remaining committed costs, including interest earned through the trust, were approximately $ 7 million as of September 30, 2025. The liabilities related to the Environmental Agreements are included in Accounts payable and accrued liabilities and Other long-term liabilities on the September 30, 2025, Consolidated Balance Sheets. In conjunction with the approval of the Environmental Agreements, the TVA Board determined that it was appropriate to record TVA's obligations under the Environmental Agreements as regulatory assets, and they are included as such on the September 30, 2025, Consolidated Balance Sheets and will be recovered in rates in future periods. Case Involving Johnsonville Aeroderivative Combustion Turbine Project. On December 22, 2022, the Southern Environmental Law Center filed a lawsuit in the U.S. District Court for the Middle District of Tennessee on behalf of the Sierra Club, alleging that TVA violated the National Environmental Policy Act ("NEPA") in deciding to build a new aeroderivative combustion turbine project at its Johnsonville facility. Both parties moved for summary judgment, and on September 30, 2024, the court granted TVA's motion for summary judgment and dismissed the lawsuit. The Sierra Club did not file an appeal within 60 days from the date of the decision, so this litigation has now ended. Case Involving Cumberland Combined Cycle Plant. On June 14, 2023, Appalachian Voices, the Center for Biological Diversity, and the Sierra Club filed a lawsuit in the United States District Court for the Middle District of Tennessee alleging that TVA violated NEPA in deciding to build a 1,450 MW combined cycle plant at its Cumberland facility. The plaintiffs request the court, among other things, to enter a declaratory judgment that the Cumberland Environmental Impact Statement ("EIS") violated NEPA and TVA's decision to issue the Cumberland Record of Decision was arbitrary, capricious, and/or not in accordance with law; enter a declaratory judgment that TVA’s failure to supplement the Cumberland EIS violated NEPA and was arbitrary, capricious, and/or not in accordance with law; vacate the Cumberland EIS and the Cumberland Record of Decision; order TVA to prepare a revised draft EIS or supplemental EIS subject to public comment that corrects the NEPA violations identified by the plaintiffs; and enjoin further construction and operation of the Cumberland combined cycle plant until TVA has complied with NEPA. TVA filed an amended answer on September 14, 2023. On February 13, 2024, the plaintiffs filed a motion to complete the administrative record that TVA submitted in support of the EIS for this project, alleging that the administrative record submitted by TVA is incomplete. The magistrate judge issued an order granting in part and denying in part the plaintiffs' motion to complete the administrative record. TVA subsequently filed a motion challenging the magistrate judge's ruling, and TVA's motion is pending before the court. In light of the outstanding issues related to the administrative record, the court suspended the parties' summary judgment deadlines. TVA cannot predict the outcome of this litigation. Challenge to Certificate for Cumberland Pipeline. On April 29, 2024, the Southern Environmental Law Center, on behalf of the Sierra Club and Appalachian Voices, filed a petition with the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") challenging the issuance by the Federal Energy Regulatory Commission ("FERC") of a certificate of public convenience for the pipeline that will need to be constructed in order for TVA to operate the Cumberland Combined Cycle Plant (the “Cumberland Pipeline”). The petitioners allege that they and their members have been and will be aggrieved by the approval, construction, and operation of the Cumberland Pipeline and are asking the D.C. Circuit to review and set aside FERC’s order approving the pipeline. The D.C. Circuit heard oral arguments on the merits on March 4, 2025, and on September 30, 2025, the D.C. Circuit issued an opinion upholding FERC's decision to issue the certificate of public convenience for the pipeline. Case Involving Kingston Gas-Fired Plant. On October 10, 2024, Appalachian Voices, the Center for Biological Diversity, and the Sierra Club filed a lawsuit in the United States District Court for the Eastern District of Tennessee alleging that TVA violated NEPA and TVA’s least-cost planning obligations in deciding to build a gas plant at its Kingston facility. The plaintiffs requested that the court, among other things, enter a declaratory judgment that the Kingston EIS violated NEPA and that TVA's decision to issue the Kingston Record of Decision was arbitrary, capricious, and/or not in accordance with law; enter a declaratory judgment that TVA’s least-cost-planning analysis was arbitrary, capricious, and/or not in accordance with law; vacate the Kingston Final EIS and the Kingston Record of Decision; order TVA to prepare a revised draft EIS or supplemental EIS that 147 Table of Contents complies with NEPA and least-cost-planning requirements; and enjoin further construction and operation of the Kingston Gas Plant until TVA has complied with NEPA, least-cost-planning requirements, and the Administrative Procedure Act. TVA filed its answer on December 16, 2024, and filed the administrative record on May 2, 2025. The plaintiffs filed a motion to complete the administrative record on June 30, 2025, and TVA filed its response on July 30, 2025. The plaintiffs filed a reply brief on August 8, 2025. TVA cannot predict the outcome of this litigation. Challenge to Kingston Construction Permit. On December 16, 2024, the Southern Environmental Law Center filed an appeal on behalf of Appalachian Voices challenging the construction permit that the Technical Secretary acting on behalf of the Tennessee Air Pollution Control Board issued to TVA on November 15, 2024, for the construction of natural gas generation at Kingston. Appalachian Voices alleges that TDEC unlawfully issued a construction permit that would allow TVA to construct the plant without meeting the requirements set forth in the Tennessee Air Quality Act's and Federal Clean Air Act’s Prevention of Significant Deterioration program. Among other things, Appalachian Voices is requesting that the Tennessee Air Pollution Control Board stay the effectiveness of the permit and order TDEC to revoke the permit. On January 7, 2025, TVA filed a petition to intervene in the administrative proceeding, which was granted on January 15, 2025. The parties filed competing motions for summary judgment on March 14, 2025, and oral argument on these motions was held on June 24, 2025. On August 20, 2025, the administrative law judge issued an order upholding the construction permit and denying Appalachian Voices' petition challenging the permit. Appalachian Voices did not appeal the initial order to the Tennessee Air Pollution Control Board by the deadline of September 19, 2025, so the order became final. Appalachian Voices can seek judicial review of the final order by filing a petition within 60 days of the order becoming final. 24. Related Parties TVA is a wholly-owned corporate agency of the federal government, and because of this relationship, TVA's revenues and expenses are included as part of the federal budget as a revolving fund. TVA's purpose and responsibilities as an agency are described under the "Other Agencies" section of the federal budget. TVA's power program and stewardship (nonpower) programs were originally funded primarily by appropriations from Congress. In 1959, Congress passed an amendment to the TVA Act that required TVA's power program to be self-financing from power revenues and proceeds from power program financings. While TVA's power program did not directly receive appropriated funds after it became self-financing, TVA continued to receive appropriations for certain multipurpose and other nonpower mission-related activities as well as for its stewardship activities. TVA has not received any appropriations from Congress for any activities since 1999, and since that time, TVA has funded stewardship program activities primarily with power revenues. The 1959 amendment to the TVA Act also required TVA, beginning in 1961, to make annual payments to the U.S. Treasury from net power proceeds as a repayment of and as a return on the Power Program Appropriation Investment until a total of $ 1.0 billion of the Power Program Appropriation Investment has been repaid in accordance with the 1959 amendment. TVA fulfilled its requirement to repay $ 1.0 billion of the Power Program Appropriation Investment in 2014. The TVA Act requires TVA to continue making payments to the U.S. Treasury as a return on the remaining $ 258 million of the Power Program Appropriation Investment. TVA paid the U.S. Treasury $ 8 million, $ 7 million, and $ 6 million in 2025, 2024, and 2023, respectively, as a return on the Power Program Appropriation Investment. The amount of the return on the Power Program Appropriation Investment is based on the Power Program Appropriation Investment balance at the beginning of that year and the computed average interest rate payable by the U.S. Treasury on its total marketable public obligations at the same date. The interest rates payable by TVA on the Power Program Appropriation Investment were 3.39 percent, 3.02 percent, and 1.99 percent for 2025, 2024, and 2023, respectively. TVA also has access to a financing arrangement with the U.S. Treasury pursuant to the TVA Act. TVA and the U.S. Treasury entered into a memorandum of understanding under which the U.S. Treasury provides TVA with a $ 150 million credit facility. This credit facility has a maturity date of September 30, 2026, and is typically renewed annually. Access to this credit facility or other similar financing arrangements has been available to TVA since the 1960s. See Note 15 — Debt and Other Obligations — Credit Facility Agreements. In the normal course of business, TVA contracts with other federal agencies for sales of electricity and other services. Transactions with agencies of the federal government were as follows: 148 Table of Contents Related Party Transactions At or for the years ended September 30 (in millions) 2025 2024 2023 Revenue from sales of electricity $ 132 $ 118 $ 120 Other income 309 273 282 Expenditures Operating expenses 264 241 234 Additions to property, plant, and equipment 13 12 8 Cash and cash equivalents 31 31 31 Accounts receivable, net 89 81 87 Investment funds 534 495 391 Long-term accounts receivable 43 35 38 Accounts payable and accrued liabilities 41 45 42 Long-term power bonds, net 4 3 1 Return on power program appropriation investment 8 7 6 25. Segment Reporting TVA operates as a single reportable segment that includes the generation, transmission, and sale of electricity throughout the Tennessee Valley. Revenue is primarily derived from wholesale electricity sales to LPCs and directly served customers. TVA's Chief Executive Officer ("CEO") serves as the CODM. The CODM uses net income in the annual planning process and to monitor budget versus actual results on a monthly basis in assessing financial performance and in determining how to allocate resources. The following table includes operating revenues, expenses, and net income as regularly provided to the CODM, which align directly to the amounts presented in TVA’s Consolidated Statements of Operations. As the segment measure used by the CODM is net income, no reconciliation is necessary. For the years ended September 30 (in millions) 2025 2024 (2) 2023 (2) Base Revenue $ 9,415 $ 8,725 $ 7,863 Fuel Revenue 4,068 3,398 4,025 Other Revenue 189 191 166 Total Operating Revenue 13,672 12,314 12,054 Fuel 2,376 2,169 2,549 Purchased Power 2,106 1,581 1,633 Operating and Maintenance 3,717 3,641 3,372 Depreciation and Amortization 2,271 2,138 2,213 Interest Expense 1,196 1,066 1,056 Tax Equivalents 633 557 593 Other Segment Items (1) 13 27 138 Net Income $ 1,360 $ 1,135 $ 500 Notes (1) Other segment items include non-utility related miscellaneous income and expenses, pension and post-retirement benefit costs, and interest income. (2) Prior period amounts have been reclassified to conform to the current period presentation resulting from the retrospective adoption of ASU 2023-07, Segment Reporting. Expanded segment disclosures were not required in the comparative periods presented because the company operated, and continues to operate, as a single reportable segment for which detailed segment expense disclosures were not previously required. Segment asset information is not presented, as it is not regularly reviewed by the CODM. The CODM evaluates capital planning and resource allocation on a consolidated basis which is presented in TVA's Consolidated Balance Sheet. Capital expenditures were $ 5.0 billion, $ 3.9 billion, and $ 3.0 billion for the years ended September 30, 2025, 2024, and 2023, respectively. 149 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors of Tennessee Valley Authority Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Tennessee Valley Authority (the Company) as of September 30, 2025, and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in proprietary capital and cash flows for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 12, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit, Risk, and Cybersecurity Committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Pension Benefit Obligation Description of the Matter At September 30, 2025, the Company’s pension benefit obligation was $10.3 billion. The Company utilizes certain actuarial assumptions to measure the pension benefit obligation at September 30, as more fully described in Note 21 to the consolidated financial statements. Auditing the pension benefit obligation was complex due to the judgmental nature of the actuarial assumptions used in the Company’s measurement process, including the discount rates, mortality rates, and cost of living adjustments. These assumptions have a significant effect on the projected pension benefit obligation. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the pension benefit obligation valuation process. For example, we tested controls over management’s review of the pension benefit obligation calculation, the relevant data inputs, and the significant actuarial assumptions described above. 150 Table of Contents To test the valuation of the pension benefit obligation, our audit procedures included, with the assistance of actuarial specialists, evaluating the methodologies used, the significant actuarial assumptions described above, and the underlying data used by the Company, among other procedures. We evaluated the Company’s methodology for determining the discount rates that reflect the maturity and duration of the benefit payments and that are used to estimate the pension benefit obligation. To evaluate the mortality rates and cost of living adjustments, we assessed whether the information was consistent with publicly available information, and whether appropriate market data adjusted for entity-specific adjustments was applied. We also tested the completeness and accuracy of the underlying data, including the participant data, used in the determination of the projected pension benefit obligation. Valuation of Alternative Investments Description of the Matter At September 30, 2025, the Company had $5.6 billion in investment funds and $8.6 billion in plan investments related to the defined benefit pension plan. Approximately 56% and 68% of investment funds and plan investments, respectively, are invested in private equity funds, private real asset funds, private credit funds, and commingled funds. These types of investments are referred to as “alternative investments”. These alternative investments are measured at fair value using the net asset value (or its equivalent) as more fully described in Note 17, for investment funds, and Note 21, for plan investments, to the consolidated financial statements. Auditing the valuation of alternative investments was challenging because of the higher estimation uncertainty of the inputs to the fair value measurements, including the underlying net asset values, discounted cash flow valuations, comparable market valuations, estimated benchmark yields, and adjustments for currency, credit, liquidity, and other risks. Additionally, certain information regarding the fair value of these alternative investments was based on unaudited information available to management at the time of valuation. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s alternative investments’ valuation process. For example, we tested controls over management's review of the alternative investment valuation, which included a comparison of returns to benchmarks and monitoring of investment managers’ valuation policies and procedures, as well as portfolio performance. To test the valuation of the alternative investments, our audit procedures included, among others, comparing fund returns to selected relevant benchmarks and understanding variations as well as comparing fair values from the most recent audited financial statements to the Company's estimated fair values. We obtained an understanding of the changes to the holdings in the investment portfolio and changes in investment strategies. We assessed the historical accuracy of management's estimates by comparing actual fair values to previous estimates. We evaluated for contrary evidence by confirming the fair values of the investments and ownership interest directly with the trustee and with a sample of investment managers. Valuation of Non-Nuclear Asset Retirement Obligations Description of the Matter At September 30, 2025, the Company’s non-nuclear asset retirement obligations (ARO) totaled $6.4 billion. As more fully described in Note 11 and Note 14 to the consolidated financial statements, the Company’s initial obligation associated with the retirement of non-nuclear generating sites, ash impoundments, transmission substation and distribution assets, and certain general facilities is recognized at fair value at the time the obligation is incurred using various judgments and assumptions. Revisions to the obligation are made whenever factors indicate that the timing or amounts of estimated cash flows have changed materially. Auditing the valuation of non-nuclear ARO was challenging because of the judgmental nature of the assumptions used in the Company’s measurement process. In particular, the obligation’s fair value is determined using a discounted cash flow technique which includes significant estimations and assumptions, including the costs of decommissioning, the method of decommissioning, and the timing of related cash flows. 151 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s valuation of its non-nuclear ARO. For example, we tested controls over management’s review of the significant estimations and assumptions described above and the relevant data inputs used in the calculations. To test the valuation of the non-nuclear ARO, our audit procedures included, among others, with the assistance of engineering specialists, evaluating the methodology used and testing the significant assumptions described above and the underlying data used by the Company in its estimates. To assess the costs of decommissioning, the method of decommissioning, and the timing of related cash flows, we evaluated changes from the prior estimate, if one existed, compared the consistency between timing of activities and the corresponding closure dates, evaluated the reasonableness of the selected method of decommissioning, assessed the estimated costs based on the method of decommissioning, and recalculated the Company’s estimate. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2007. Chattanooga, Tennessee November 12, 2025 152 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.