v3.25.2
Fair Value Measurements
 9 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements 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 June 30, 2025, Investment funds were comprised of $5.3 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 $3.5 billion and $1.6 billion, respectively, at June 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 Internal Revenue Service ("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, and real estate investment trust securities and certain derivative instruments are measured based on quoted exchange prices in active markets and are classified as Level 1 valuations. Fixed-income investments, high-yield fixed-income investments, currencies, and most derivative instruments are non-exchange traded and are classified as Level 2 valuations. 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 $368 million, private real assets of $128 million, and private credit of $119 million at June 30, 2025. The ART had unfunded commitments related to limited partnerships in private equity of $143 million, private real assets of $77 million, and private credit of $58 million at June 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. Private equity limited partnerships, private real asset investments, and private credit investments are valued at net asset value ("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 of the Notes to Consolidated Financial Statements in the Annual Report and Note 9 — 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)
(in millions)
 
Three Months Ended June 30
 Nine Months Ended June 30
FundFinancial Statement Presentation2025202420252024
NDT
Regulatory assets(2)
$200 $(21)$133 $230 
ART
Regulatory assets(3)
97 (4)69 119 
SERPOther income (expense), net5 — (1)9 
DCPOther income (expense), net2 — — 2 
Notes
(1) The unrealized gains for the RP were less than $1 million for both the three and nine months ended June 30, 2025 and for both the three and nine months ended June 30, 2024, and therefore were not represented in the table above.
(2) Includes $41 million and $7 million of unrealized gains related to NDT equity securities (excluding commingled funds) for the three months ended June 30, 2025 and 2024, respectively. Includes $12 million of unrealized losses and $70 million of unrealized gains related to NDT equity securities (excluding commingled funds) for the nine months ended June 30, 2025 and 2024, respectively.
(3) Includes $10 million and $1 million of unrealized gains related to ART equity securities (excluding commingled funds) for the three months ended June 30, 2025 and 2024, respectively. Includes $5 million of unrealized losses and $24 million of unrealized gains related to ART equity securities (excluding commingled funds) for the nine months ended June 30, 2025 and 2024, respectively.
Currency and Interest Rate Swap Derivatives

See Note 14 — 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.

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 14 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity 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 no change in the fair value of assets and a less than $3 million decrease in the fair value of liabilities at June 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 June 30, 2025, and September 30, 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.

Fair Value Measurements
At June 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$736 $— $— $736 
Government debt securities(1)(2)
408 44 — 452 
Corporate debt securities(3)
— 379 — 379 
Mortgage and asset-backed securities— 35 — 35 
Institutional mutual funds
352 — — 352 
Forward debt securities contracts— 18 — 18 
Cash equivalents and other short-term investments(2)(4)
48 202 — 250 
Private equity funds measured at net asset value(5)
— — — 868 
Private real asset funds measured at net asset value(5)
— — — 474 
Private credit funds measured at net asset value(5)
— — — 267 
Commingled funds measured at net asset value(5)
— — — 1,446 
Total investments1,544 678 — 5,277 
Commodity contract derivatives— 6 — 6 
Commodity derivatives under the FHP— 24 — 24 
Total$1,544 $708 $— $5,307 
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)
$— $91 $— $91 
Interest rate swaps— 673 — 673 
Commodity contract derivatives— 5 — 5 
Commodity derivatives under the FHP— 25 — 25 
Total$— $794 $— $794 
Notes
(1) Includes obligations of government-sponsored entities.
(2) There are $408 million of U.S. Treasury securities in Level 1 Government debt securities and $48 million of U.S. Treasury securities in Level 1 Cash equivalents and other short-term investments for a total of $456 million of U.S. Treasury securities within Level 1 of the fair value hierarchy.
(3) Includes both U.S. and foreign debt.
(4) Includes $98 million net payables (interest receivable, dividends receivable, receivables for investments sold, and payables for investments purchased), and $204 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 14 — Risk Management Activities and Derivative Transactions — Offsetting of Derivative Assets and Liabilities.
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 investments1,607 672 — 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 14 — Risk Management Activities and Derivative Transactions — Offsetting of Derivative Assets and Liabilities.
        
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 June 30, 2025, and September 30, 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 June 30, 2025, and September 30, 2024, were as follows:
Estimated Values of Financial Instruments Not Recorded at Fair Value
(in millions)
 At June 30, 2025At September 30, 2024
 Valuation ClassificationCarrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
EnergyRight® receivables, net (including current portion)
Level 2$56 $56 $56 $56 
Loans and other long-term receivables, net (including current portion)Level 2114 108 105 99 
EnergyRight® financing obligations (including current portion)
Level 265 73 66 74 
Membership interests of VIEs subject to mandatory redemption (including current portion)Level 216 18 17 19 
Long-term outstanding power bonds, net (including current maturities)Level 220,599 20,483 18,889 19,416 
Long-term debt of VIEs, net (including current maturities)Level 21,699 1,693 934 966 

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.