Risk Management Activities and Derivative Transactions (Tables)

9 Months Ended

Jun. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Derivative Instruments That Receive Hedge Accounting Treatment

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) (in millions)
			Three Months Ended June 30				Nine Months Ended June 30
Derivatives in Cash Flow Hedging Relationship	Objective of Hedge Transaction	Accounting for Derivative Hedging Instrument	2025		2024		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 Accumulated other comprehensive income (loss) ("AOCI") and reclassified to Interest expense to the extent they are offset by gains and losses on the hedged transaction	$	47	$	1	$	24	$	17


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 (in millions)
	Three Months Ended June 30				Nine Months Ended June 30
Derivatives in Cash Flow Hedging Relationship	2025		2024		2025		2024
Currency swaps	$	38	$	7	$	15	$	20

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 $1 million of loss 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 gains on the debt.

^[1]

Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment


Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment Amount of Gain (Loss) Recognized in Income on Derivatives(1) (in millions)
			Three Months Ended June 30				Nine Months Ended June 30
Derivative Type	Objective of Derivative	Accounting for Derivative Instrument	2025		2024		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	$	(11)	$	(8)	$	(33)	$	(23)


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)	(13)		(72)		(64)		(227)

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 assets and liabilities. As such, there were no related gains (losses) recognized in income for these unrealized gains (losses) for the three and nine months ended June 30, 2025 and for the three and nine months ended June 30, 2024.

(2) Of the amount recognized for the three months ended June 30, 2025, $3 million and $10 million were reported in Fuel expense and Purchased power expense, respectively, and of the amount recognized for the three months ended June 30, 2024, $59 million and $13 million were reported in Fuel expense and Purchased power expense, respectively. Of the amount recognized for the nine months ended June 30, 2025, $12 million and $52 million were reported in Fuel expense and Purchased power expense, respectively, and of the amount recognized for the nine months ended June 30, 2024, $186 million and $41 million were reported in Fuel expense and Purchased power expense, respectively.

Fair Value of TVA Derivatives

Fair Values of TVA Derivatives

(in millions)

At June 30, 2025

At September 30, 2024

Derivatives That Receive Hedge Accounting Treatment:

Balance

Balance Sheet Presentation

Balance

Balance Sheet Presentation

Currency swaps

£250 million Sterling

(35)

Accounts payable and accrued liabilities $(4); Other long-term liabilities $(31)

(49)

Accounts payable and accrued liabilities $(4); Other long-term liabilities $(45)

£150 million Sterling

(56)

Accounts payable and accrued liabilities $(2); Other long-term liabilities $(54)

(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

(508)

Accounts payable and

accrued liabilities $(30); Accrued interest $(8);

Other long-term liabilities

$(470)

(622)

Accounts payable and

accrued liabilities $(10); Accrued interest $(26); Other long-term liabilities $(586)

$476 million notional

(165)

Accounts payable and

accrued liabilities $(12); Accrued interest $(1);

Other long-term liabilities

$(152)

(218)

Accounts payable and

accrued liabilities $(3); Accrued interest $(9);

Other long-term liabilities

$(206)

Commodity contract derivatives

Other current assets $6; Accounts payable and accrued liabilities $(3); Other long-term liabilities $(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

(1)

Other long-term assets $17; Other current assets $7; Accounts payable and accrued liabilities $(19); Other long-term liabilities $(6)

(161)

Accounts payable and accrued liabilities $(99); Other long-term liabilities $(62)

Commodity Contract Derivatives

At June 30, 2025

At September 30, 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

412 million mmBtu

321 million mmBtu

Offsetting 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) (in millions)
	At June 30, 2025		At September 30, 2024
Assets
Commodity contract derivatives	$	6	$	7

Commodity derivatives under the FHP(2)	24		—
Total derivatives subject to master netting or similar arrangement	$	30	$	7



Liabilities
Currency swaps	$	91	$	116
Interest rate swaps(3)	673		840
Commodity contract derivatives	5		5
Commodity derivatives under the FHP(2)	25		161

Total derivatives subject to master netting or similar arrangement	$	794	$	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 June 30, 2025, or September 30, 2024.

(2) At June 30, 2025, the gross derivative asset and gross derivative liability were $54 million and $55 million, respectively, with offsetting amounts for each totaling $30 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 $411 million and $535 million were posted as collateral at June 30, 2025, and September 30, 2024, respectively, to partially secure the liability positions of one of the interest rate swaps in accordance with the collateral requirements for this derivative.

Schedule of Derivative Instruments Commodity Contracts Under FHP


Commodity Derivatives under Financial Hedging Program(1)
	At June 30, 2025					At September 30, 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	210	284	million mmBtu	$	(1)	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.

[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 $1 million of loss 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 gains on the debt.