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What changed in Tennessee Valley Authority's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Tennessee Valley Authority's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+866 added−819 removedSource: 10-K (2023-11-14) vs 10-K (2022-11-15)

Top changes in Tennessee Valley Authority's 2023 10-K

866 paragraphs added · 819 removed · 619 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

240 edited+102 added−85 removed170 unchanged
Biggest changeAwards Awards and other recognition help TVA understand its strengths, identify opportunities for improvement, bolster employee pride, and better attract and retain diverse talent. 2022 TVA recognition included: • 2022 – Ethisphere ® Compliance Leader Verification TM – first federal agency to receive certification • Chief Learning Officer – 2022 Learning Elite Bronze • Urban League of Greater Chattanooga, Inc. – Inclusion by Design Award • 2022 Diversity Impact Award – Top 10 Diversity Action Award • 2022 VETS Indexes Employer Awards – VETS Indexes 5 Star Employer • 2022 National Organization on Disability – Leading Disability Employer • 2022 Military Friendly ® Employers – Ranked No. 3 • 2022 Forbes List of America's Best Employers by State – Ranked Top 15 in Tennessee for Fourth Consecutive Year • 2022 Military Friendly ® Supplier Diversity Program Award – Ranked No. 1; Top 10, three years in a row • One of the largest U.S.
Biggest changeRecent accomplishments to strengthen the relationship between TVA and its labor unions include integrating union partners in TVA’s comprehensive workforce optimization strategy, in alignment with operational and asset transition strategies that position TVA to meet strategic imperatives over the next decade; negotiating a three-year wage agreement between TVA and the Office and Professional Employees International Union through September 2026; and collaborating with IwD to hold the first ever IwD Forum with union leaders to align on how TVA and the union work together to reach goals for a skilled workforce representative of the Tennessee Valley. 40 Table of Contents Awards Awards and other recognition help TVA understand its strengths, identify opportunities for improvement, bolster employee pride, and better attract and retain diverse talent. 2023 TVA recognition included: • 2022-2023 – Ethisphere ® Compliance Leader Verification TM – first federal agency to receive certification • 2023 Military Friendly ® Brand – Rank "Designated" • 2023 National Organization on Disability – Leading Disability Employer • 2023 Military Friendly ® Employers – Ranked No. 4 • 2023 Fair360 – Top Companies for Utilities Award – Ranked No. 3; Top Regional Companies - No. 12 • 2023 Military Friendly ® Military Spouse Friendly Employers - Ranked No. 7 • 2023 VETS Indexes Employer Awards – VETS Indexes 5-Star Employer • 2023 Military Friendly ® Supplier Diversity Program Award – Ranked No. 1; Top 10, four years in a row • 2023 Forbes America's Best Employers By State - Ranked No. 8 in Tennessee • One of the largest U.S.
Each of these contracts requires the LPC to purchase from TVA all of the electric power required for service to the LPC's customers; however, Power Supply Flexibility Agreements available to LPCs that have executed long-term contracts with TVA allow LPCs 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.
Each of these contracts requires the LPC to purchase from TVA all of the electric power required for service to the LPC's customers; however, Power Supply Flexibility Agreements available to LPCs that have executed long-term Partnership Agreements with TVA allow LPCs 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.
In August 2015, TDEC issued an order that (1) established a process for TDEC to oversee TVA's implementation of the EPA's CCR rule and to ensure coordination and compliance with Tennessee laws and regulations that govern the management of CCR and (2) required TVA to investigate and assess CCR contamination risks at seven of TVA's eight coal-fired plants in Tennessee and to remediate any unacceptable risks.
In August 2015, TDEC issued an order that (1) established a process for TDEC to oversee TVA's implementation of the EPA's CCR Rule to ensure coordination and compliance with Tennessee laws and regulations that govern the management and disposal of CCR and (2) required TVA to investigate and assess CCR contamination risks at seven of TVA's eight coal-fired plants in Tennessee and to remediate any unacceptable risks.
All TVA wholesale power contracts are all requirements contracts; however, Power Supply Flexibility Agreements available to LPCs that have executed long-term contracts with TVA allow LPCs 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.
All TVA wholesale power contracts are all requirements contracts; however, Power Supply Flexibility Agreements available to LPCs that have executed long-term Partnership Agreements with TVA allow LPCs 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.
These rates are revised from time to time, subject to TVA approval, to reflect changes in costs, including changes in the wholesale cost of power. TVA also regulates LPC policies for customer deposits, termination of service for non-payment, information to consumers, and billing through a service practice policy framework.
These rates are revised from time to time, subject to TVA approval, to reflect changes in costs, including changes in the wholesale cost of power. TVA also regulates LPC policies for customer deposits, termination of service for non-payment, providing information to consumers, and billing through a service practice policy framework.
Management illustrates its commitment to human capital by including a safety metric in its incentive compensation metrics that tracks serious injury incident rate and applies to all eligible participants in TVA’s annual program. Compensation derived from this program is based on TVA performance and individual achievements.
Management illustrates its commitment to human capital by including a safety metric in its incentive compensation metrics that tracks the serious injury incident rate and applies to all eligible participants in TVA’s annual program. Compensation derived from this program is based on TVA performance and individual achievements.
The following table shows TVA's generation and purchased power by generating source as a percentage of all electric power generated and purchased (based on kilowatt hours ("kWh")) for the periods indicated: Total Power Supply by Generating Source For the years ended September 30 Generation Resource (1) 2022 2021 2020 Nuclear 39% 41% 42% Natural gas and/or oil-fired 22% 21% 22% Coal-fired 13% 15% 13% Hydroelectric 8% 10% 10% Purchased power 18% 13% 13% Note (1) TVA's non-hydro renewable resources from TVA facilities are less than one percent for all periods shown, and therefore are not represented on the table above.
The following table shows TVA's generation and purchased power by generating source as a percentage of all electric power generated and purchased (based on kilowatt hours ("kWh")) for the periods indicated: Total Power Supply by Generating Source For the years ended September 30 Generation Resource (1) 2023 2022 2021 Nuclear 42% 39% 41% Natural gas and/or oil-fired 22% 22% 21% Coal-fired 13% 13% 15% Hydroelectric 8% 8% 10% Purchased power 15% 18% 13% Note (1) TVA's non-hydro renewable resources from TVA facilities are less than one percent for all periods shown, and therefore are not represented on the table above.
In August 2022, the Inflation Reduction Act of 2022 ("Inflation Reduction Act") was signed into law, which makes certain tax-exempt entities, including TVA, eligible for a direct-pay option for certain tax credits that encourage investment in clean energy, in some circumstances.
In 2022, the Inflation Reduction Act of 2022 ("Inflation Reduction Act") was signed into law, which makes certain tax-exempt entities, including TVA, eligible for a direct-pay option for certain tax credits that encourage investment in clean energy, in some circumstances.
In setting the base rates, TVA uses a debt-service coverage ("DSC") methodology to derive annual revenue requirements in a manner similar to that used by other public power entities that also use the DSC rate methodology.
In setting the base rates, TVA uses a debt-service coverage methodology to derive annual revenue requirements in a manner similar to that used by other public power entities that also use the debt-service coverage rate methodology.
Fuel costs are allocated to three groups of customers: (1) Standard Service (residential and small commercial customers), (2) large general service customers with contract demands greater than 5 megawatts ("MW"), and (3) large manufacturing customers with contract demands greater than 5 MW.
Fuel costs are allocated to three groups of customers: (1) Standard Service (residential and small commercial customers), (2) large general service customers with contract demands greater than 5 MW, and (3) large manufacturing customers with contract demands greater than 5 MW.
It regularly highlights social events and supports career-enriching workshops. • African American Voices — provides an avenue for African American and others interested in fellowship and smart career connections within TVA.
It regularly highlights social events and supports career-enriching workshops. • African American Voices — provides an avenue for African Americans and others interested in fellowship and smart career connections within TVA.
Sixty-six of the simple-cycle units are currently capable of quick-start response allowing full generation capability in approximately 10 minutes. The economic dispatch of natural gas-fired plants depends on both the day-to-day price of natural gas and the price of other available intermediate resources such as coal-fired plants. TVA uses simple-cycle units to meet peaking or backup power needs.
Sixty-five of the simple-cycle units are currently capable of quick-start response allowing full generation capability in approximately 10 minutes. The economic dispatch of natural gas-fired plants depends on both the day-to-day price of natural gas and the price of other available intermediate resources such as coal-fired plants. TVA uses simple-cycle units to meet peaking or backup power needs.
TVA’s Employee Engagement Survey is a key tool for understanding and leveraging the employee voice. The survey is administered a minimum of twice annually to all employees and measures overall engagement and drivers of engagement.
TVA’s Employee Engagement Survey is a key tool for understanding and leveraging the employee voice. The survey is administered a minimum of annually to all employees and measures overall engagement and drivers of engagement.
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. See Note 21 — Commitments and Contingencies — Legal Proceedings — Environmental Agreements , which discussion is incorporated herein by reference. Acid Rain Program.
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. See Note 22 — Commitments and Contingencies — Legal Proceedings — Environmental Agreements , which discussion is incorporated herein by reference. Acid Rain Program.
TVA also has advanced leadership programs designed to further prepare leaders for executive level positions, which require an extensive interview and assessment process for selection. Through TVA’s talent review and succession planning program, 98 percent of director and executive level roles have at least one succession candidate identified, with 94 percent having at least one ready-now succession candidate.
TVA also has advanced leadership programs designed to further prepare leaders for executive level positions, which require an extensive interview and assessment process for selection. Through TVA’s talent review and succession planning program, 98 percent of director and executive level roles have at least one succession candidate identified, with 93 percent having at least one ready-now succession candidate.
Physical impacts of climate change may include, but not be limited to, changing weather patterns, extreme weather conditions, and other events such as flooding, droughts, wildfires, and snow or ice storms, and these events can impact TVA's system in terms of system operability, customer demand, and the health of regional economies.
Physical impacts of climate change may include, but not be limited to, changing weather patterns, extreme weather conditions, and other events such as flooding, droughts, wildfires, heat waves, and snow or ice storms, and these events can impact TVA's system in terms of system operability, customer demand, and the health of regional economies.
The U.S. Supreme Court concluded that Congress did not grant the EPA authority under the CAA to demand generation-shifting to achieve reduction of GHG emissions, but the court did not hold that the EPA is limited in future rulemakings to just the heat-rate improvements that made up the ACE rule. The judgment of the D.C.
Supreme Court concluded that Congress did not grant the EPA authority under the CAA to demand generation-shifting to achieve reduction of GHG emissions, but the court did not hold that the EPA is limited in future rulemakings to just the heat-rate improvements that made up the ACE rule. The judgment of the D.C.
On August 25, 2022, the EPA issued a final action stating that 15 states, including Kentucky, failed to submit a complete SIP, which triggers a two-year deadline for the EPA to promulgate a FIP for the state unless Kentucky submits, and the EPA approves, a SIP satisfying the visibility protection requirements of the CAA.
On August 25, 2022, the EPA issued a final action stating that 15 states, including Kentucky, failed to submit a complete SIP, which triggered a two-year deadline for the EPA to promulgate a FIP for the state unless Kentucky submits, and the EPA approves, a SIP satisfying the visibility protection requirements of the CAA.
Renewable/Clean Energy Standards Thirty-eight states and the District of Columbia have established enforceable or mandatory requirements for electric utilities to generate a certain amount of electricity from renewable sources or have established a renewable goal. In 12 of those states and the District of Columbia, the requirement is for a 100% clean electricity standard or goal by 2050 or earlier.
Renewable/Clean Energy Standards Thirty-six states and the District of Columbia have established enforceable or mandatory requirements for electric utilities to generate a certain amount of electricity from renewable sources or have established a renewable goal. In 12 of those states and the District of Columbia, the requirement is for a 100% clean electricity standard or goal by 2050 or earlier.
(4) These estimates do not include expenditures expected to be incurred after 2027. (5) Includes costs associated with the closure of facilities and landfill activities. TVA is continuing to evaluate the rules and their impact on its operations, including the cost and timing estimates of related projects.
(4) These estimates do not include expenditures expected to be incurred after 2028. (5) Includes costs associated with the closure of facilities and landfill activities. TVA is continuing to evaluate the rules and their impact on its operations, including the cost and timing estimates of related projects.
TVA is partnering with LPCs and others to support the electrification of transportation in the Tennessee Valley in a multi-year EV initiative. The initiative focuses on reducing or eliminating EV market barriers by setting EV policies, improving charging infrastructure availability, expanding EV availability and offerings, and spreading EV consumer awareness.
TVA is partnering with LPCs and others to support the electrification of transportation in the Tennessee Valley in a multi-year EV initiative. The initiative focuses on reducing or eliminating EV market barriers with EV policies, improving charging infrastructure availability, expanding EV availability and offerings, and spreading EV consumer awareness.
During 2022 and 2021, TVA purchased coal by basin as follows: 21 Table of Contents The following charts present the proportion of each delivery method TVA utilizes for its coal supply for the periods indicated: Coal inventory increased at September 30, 2022 as compared to September 30, 2021.
During 2023 and 2022, TVA purchased coal by basin as follows: 21 Table of Contents The following charts present the proportion of each delivery method TVA utilizes for its coal supply for the periods indicated: Coal inventory increased at September 30, 2023 as compared to September 30, 2022.
See Power Supply and Load Management Resources — Coal-Fired above and Estimated Required Environmental Expenditures below. SO 2 Emissions and NO x Emissions. To reduce SO 2 emissions, TVA operates scrubbers on 18 of its coal-fired units and switched to lower-sulfur coal at certain coal-fired units.
See Power Supply and Load Management Resources — Coal-Fired above and Estimated Required Environmental Expenditures below. SO 2 Emissions and NO x Emissions. To reduce SO 2 emissions, TVA operates scrubbers on 17 of its coal-fired units and switched to lower-sulfur coal at certain coal-fired units.
It provides organizational information and cross-functional connections not only on the front-end to new employees but throughout an employee’s tenure at the company. • Spectrum — highlights the open, accepting, and safe work environment TVA provides for all employees and focuses increasing visibility on educational and social opportunities on LGBTQ+ issues by offering employees a variety of community and professional networking opportunities within the Tennessee Valley. • TVA & Amigos — provides an avenue for TVA's Hispanic employees and those interested in Latin culture to be involved in professional, educational, and service-oriented events. • TVA Veterans Association — allows employees unique camaraderie opportunities as they support a wide array of local and national ceremonies and events and is one of the oldest and most active resource groups at TVA, with all branches of the military represented. • Women Empowered — supports women at all stages of their careers and advocates for the equal rights of all 36 Table of Contents female employees across TVA.
It provides organizational information and cross-functional connections not only on the front-end to new employees but throughout an employee’s tenure at the company. • Spectrum — highlights the open, accepting, and safe work environment TVA provides for all employees and focuses increasing visibility on educational and social opportunities on LGBTQ+ issues by offering employees a variety of community and professional networking opportunities within the Tennessee Valley. • TVA & Amigos — provides an avenue for TVA's Hispanic employees and those interested in Latin culture to be involved in professional, educational, and service-oriented events. • TVA Veterans Association — allows employees unique camaraderie opportunities as they support a wide array of local and national ceremonies and events and is one of the oldest and most active ERGs at TVA, with all branches of the military represented. • Women Empowered — supports women at all stages of their careers and advocates for the equal rights of all female employees across TVA.
See Note 22 — Related Parties . TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment in 2014; therefore, the repayment of this amount is no longer a component of rate setting.
See Note 23 — Related Parties . TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment in 2014; therefore, the repayment of this amount is no longer a component of rate setting.
See Regulation . Additional transmission upgrades may be required to maintain reliability. Upgrades may include enhancements to existing lines and substations or new installations as necessary to provide adequate power transmission capacity, maintain voltage support, and ensure generating plant and transmission system stability.
Additional transmission upgrades may be required to maintain reliability. Upgrades may include enhancements to existing lines and substations or new installations as necessary to provide adequate power transmission capacity, maintain voltage support, and ensure generating plant and transmission system stability.
Also, since TVA securities are exempted securities under the Securities Act, TVA is exempt from the Trust Indenture Act of 1939 insofar as it relates to securities issued by TVA, and no independent trustee is required for these securities. Federal Energy Regulatory Commission Under the FPA, TVA is not a "public utility," a term which primarily refers to investor-owned utilities.
Also, since TVA securities are exempted securities under the Securities Act, TVA is exempt from the Trust Indenture Act of 1939 insofar as it relates to securities issued by TVA, and no independent trustee is required for these securities. 26 Table of Contents Federal Energy Regulatory Commission Under the FPA, TVA is not a "public utility," a term which primarily refers to investor-owned utilities.
TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems. Nuclear Regulatory Commission TVA operates its nuclear facilities in a highly regulated environment and is subject to the oversight of the NRC, an 26 Table of Contents independent federal agency that sets the rules that users of radioactive materials must follow.
TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems. Nuclear Regulatory Commission TVA operates its nuclear facilities in a highly regulated environment and is subject to the oversight of the NRC, an independent federal agency that sets the rules that users of radioactive materials must follow.
In October 2021, TVA filed Notices of Planned Participation preserving the option for TVA's Bull Run, Cumberland, and Kingston plants to participate in the subcategory for units that cease coal combustion by the end of CY 2028. Petitions for judicial review of the October 2020 ELG rule were filed in the D.C. Circuit and the U.S.
In October 2021, TVA filed Notices of Planned Participation preserving the option for TVA's Bull Run, Cumberland, and Kingston plants to participate in the subcategory for units that cease coal combustion by the end of CY 2028. 33 Table of Contents Petitions for judicial review of the October 2020 ELG rule were filed in the D.C. Circuit and the U.S.
The Kentucky Department for Environmental Protection issued a final revised permit for Shawnee in the fourth quarter of 2021 and an additional revision in the second quarter of 2022, and the Tennessee Department of Environment and Conservation ("TDEC") issued a final revised permit for Kingston in the first quarter of 2022.
The Kentucky Department for Environmental Protection issued a final revised permit for Shawnee in the fourth quarter of 2021 and an additional revision in the second quarter of 2022. The Tennessee Department of Environment and Conservation ("TDEC") issued a final revised permit for Kingston in the first quarter of 2022 and for Gallatin in May 2022.
There could be additional material costs if further reductions of GHGs, including CO 2 , are mandated by legislative, executive, regulatory, or judicial actions and if more stringent emission reduction requirements for conventional pollutants are established. These costs cannot reasonably be predicted at this time because of the uncertainty of these actions.
There could be additional material costs if further reductions of GHGs, including CO 2 , are mandated by legislative, 35 Table of Contents executive, regulatory, or judicial actions and if more stringent emission reduction requirements for conventional pollutants are established. These costs cannot reasonably be predicted at this time because of the uncertainty of these actions.
Historically, SIPs developed under the CAA typically excluded periods of startup, shutdowns, and malfunctions, but in June 2015, the EPA finalized a rule to eliminate such exclusions ("2015 Rule"). Environmental petitioners and several states filed petitions for judicial review of the 2015 Rule before the U.S. Court of Appeals for the District of Columbia Circuit ("D.C.
Historically, SIPs developed under the CAA typically excluded periods of startup, shutdowns, and malfunctions, but in June 2015, the EPA finalized a rule to eliminate such exclusions ("2015 Rule"). Environmental petitioners and several states filed petitions for judicial review of the 2015 Rule before the U.S. Court of Appeals for the D.C.
TVA supports eight ERGs to help strengthen an inclusive culture and make life better for the people it serves: • ABLED Events — allows TVA employees to bring unique perspectives and gifts together as a united team to celebrate commonalities and differences through "Awareness Benefitting Leaders & Employees about disAbilities" in the workplace. • ACTion — celebrates and honors the many Asian cultures represented within TVA, from Japan to India, and to the Philippines and beyond.
TVA supports nine ERGs to help strengthen an inclusive culture and make life better for the people it serves: • ABLED Events — allows TVA employees to bring unique perspectives and gifts together as a united team to celebrate commonalities and differences through "Awareness Benefiting Leaders & Employees about disAbilities" in the workplace. • ACTion — celebrates and honors the many Asian cultures represented within TVA, from Japan to India, and to the Philippines and beyond.
The program analyzes, evaluates, and manages risks through a systematic and thorough process that facilitates decision-making for the safety of a structure, identifying necessary actions to reduce risk, including remediation projects, and prioritization of actions for TVA's river dams. Prioritization is driven by reducing risk to the public and asset preservation.
The program analyzes, evaluates, and manages risks through a systematic and thorough process that facilitates decision-making for the safety of a structure, identifying necessary actions to reduce risk, including remediation projects, and prioritization of actions for TVA's river 15 Table of Contents dams. Prioritization is driven by reducing risk to the public and asset preservation.
See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Electric Vehicles. Onsite energy management technologies and the proliferation of companies interested in providing services to support and aggregate the impacts of such systems provide another DER opportunity.
See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Electric Vehicles. On-site energy management technologies and the proliferation of companies interested in providing services to support and aggregate the impacts of such systems provide another DER opportunity.
Likewise, the Mississippi Public Service Commission adopted an energy efficiency rule applying to electric and natural gas providers in the state, and TVA is supplying information on participation in TVA's energy efficiency programs to support the covered Mississippi LPCs. Water Quality Control Developments Waters of the United States .
Likewise, the Mississippi Public Service Commission adopted an energy efficiency rule applying to electric and natural gas providers in the state, and TVA is supplying information on participation in TVA's energy efficiency programs to support the covered Mississippi LPCs. 32 Table of Contents Water Quality Control Developments Waters of the United States .
During 2022, storage levels were generally maintained at between 40 and 80 percent of the maximum contracted capacity at each facility. As TVA's natural gas requirements grow, it is anticipated that additional storage capacity may need to be acquired to meet the needs of the generating assets. In 2023, TVA expects to increase its storage portfolio by approximately 10 percent.
During 2023, storage levels were generally maintained at between 40 and 80 percent of the maximum contracted capacity at each facility. As TVA's natural gas requirements grow, it is anticipated that additional storage capacity may need to be acquired to meet the needs of the generating assets. In 2024, TVA expects to increase its storage portfolio by approximately seven percent.
The costs of complying with these laws, regulations, and orders are expected to be substantial, and costs could be significantly more than TVA anticipates. 25 Table of Contents Congress TVA exists pursuant to the TVA Act as enacted by Congress and carries on its operations in accordance with this legislation.
The costs of complying with these laws, regulations, and orders are expected to be substantial, and costs could be significantly more than TVA anticipates. Congress TVA exists pursuant to the TVA Act as enacted by Congress and carries on its operations in accordance with this legislation.
To help shape an inclusive work environment that values all voices, TVA has intensified its efforts over the past few years to integrate diversity and inclusion into its culture and make its efforts and progress sustainable and a part of TVA's daily operations.
To help shape an inclusive work environment that values all voices, TVA has intensified its efforts over the past few years to integrate IwD into its culture and make its efforts and progress sustainable and a part of TVA's daily operations.
State agencies administer the NPDES 31 Table of Contents permit program in most states including those in which TVA's facilities are located. In addition, the responsible state agencies must provide all permit applications to the U.S. Fish and Wildlife Service for a 60-day review prior to public notice and an opportunity to comment during the public notice.
State agencies administer the NPDES permit program in most states including those in which TVA's facilities are located. In addition, the responsible state agencies must provide all permit applications to the U.S. Fish and Wildlife Service for a 60-day review prior to public notice and an opportunity to comment during the public notice.
Coal Coal consumption at TVA's coal-fired generating facilities during both 2022 and 2021 was approximately 12 million tons. At September 30, 2022 and 2021, TVA had 25 days and 21 days of system-wide coal supply at full burn rate, respectively, with net book values of $165 million and $107 million, respectively. TVA utilizes both short-term and long-term coal contracts.
Coal Coal consumption at TVA's coal-fired generating facilities during both 2023 and 2022 was approximately 12 million tons. At September 30, 2023 and 2022, TVA had 21 days and 25 days of system-wide coal supply at full burn rate, respectively, with net book values of $204 million and $165 million, respectively. TVA utilizes both short-term and long-term coal contracts.
TVA performs long-term least-cost resource planning through its Integrated Resource Plan process. Paris Agreement . The United States is currently part of the Paris Agreement. The Paris Agreement tracks emissions targets through nationally determined contributions ("NDCs"). Each nation that is a party to the Paris Agreement is asked to prepare five-year, successive NDCs that it plans to achieve.
TVA performs long-term least-cost resource planning through its Integrated Resource Plan process. Paris Agreement . The U.S. is currently part of the Paris Agreement. The Paris Agreement tracks emissions targets through nationally determined contributions ("NDCs"). Each nation that is a party to the Paris Agreement is asked to prepare five-year, successive NDCs that it plans to achieve.
TVA's regulatory framework provides for consistent regulatory policy for ratepayers across the Tennessee Valley, while recognizing local considerations. The regulatory provisions in TVA's wholesale power contracts are designed to carry out the objectives of the TVA Act, including the objective of providing for an adequate supply of power at the lowest feasible rates.
TVA's regulatory framework provides for consistent regulatory policy for ratepayers across the Tennessee Valley, while recognizing local considerations. The regulatory provisions in TVA's wholesale power contracts are designed to carry out the objectives of the TVA Act, including the objective of providing for an adequate supply of power at the lowest feasible rates. See Rates — Rate Methodology below.
Overall, TVA will procure needed renewable supply through a diversified approach, which could include a competitive procurement process, strategic partnerships, or construction of renewable facilities to meet these needs. 16 Table of Contents Total Renewable Energy Resources . As of September 30, 2022, TVA's total renewable energy resources amounted to 8,264 MW.
Overall, TVA will procure needed renewable supply through a diversified approach, which could include a competitive procurement process, strategic partnerships, or construction of renewable facilities to meet these needs. 16 Table of Contents Total Renewable Energy Resources . As of September 30, 2023, TVA's total renewable energy resources amounted to 8,668 MW.
Environmental Investments From 1970 to 2022, TVA spent approximately $6.8 billion on controls to reduce emissions from its coal-fired power plants. In addition, TVA has reduced emissions by idling or retiring coal-fired units and relying more on cleaner energy resources including natural gas and nuclear generation.
Environmental Investments From 1970 to 2023, TVA spent approximately $6.8 billion on controls to reduce emissions from its coal-fired power plants. In addition, TVA has reduced emissions by idling or retiring coal-fired units and relying more on cleaner energy resources including natural gas and nuclear generation and renewable sources.
Under the DSC methodology, rates are calculated so that an entity will be able to cover its operating costs and to satisfy its obligations to pay principal and interest on debt, plus an additional margin.
Under the debt-service coverage methodology, rates are calculated so that an entity will be able to cover its operating costs and to satisfy its obligations to pay principal and interest on debt, plus an additional margin.
See Part II, Item 7, Management's 33 Table of Contents Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Coal Combustion Residuals — Coal Combustion Residuals Facilities and — Allen Groundwater Investigation and Note 13 — Asset Retirement Obligations.
See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Coal Combustion Residuals — Coal Combustion Residuals Facilities and — Allen Groundwater Investigation and Note 13 — Asset Retirement Obligations.
Economic development programs developed by TVA support all communities, including rural and economically distressed communities, across the Tennessee Valley . Through its economic development activities, TVA endeavors to recruit and retain companies in targeted business sectors, foster capital investment and job growth, and assist communities in the Tennessee Valley with economic growth opportunities.
Economic development programs developed by TVA support all communities, including rural and economically distressed communities, across the Tennessee Valley . Through its economic development activities, TVA endeavors to recruit and retain companies in targeted business sectors, foster capital investment and job growth, and assist communities in the 25 Table of Contents Tennessee Valley with economic growth opportunities.
TVA plans to continue using contracts of various products, lengths, and terms as well as inventory to meet the projected nuclear fuel needs of its nuclear fleet. The net book value of TVA's nuclear fuel was $1.5 billion and $1.6 billion at September 30, 2022 and 2021, respectively.
TVA plans to continue using contracts of various products, lengths, and terms as well as inventory to meet the projected nuclear fuel needs of its nuclear fleet. The net book value of TVA's nuclear fuel was $1.3 billion and $1.5 billion at September 30, 2023 and 2022, respectively.
See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Optimum Energy Portfolio . Diesel Generators At September 30, 2022, TVA had one diesel generator plant consisting of five units, and this facility accounted for 9 MW of summer net capability.
See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Optimum Energy Portfolio . 14 Table of Contents Diesel Generators At September 30, 2023, TVA had one diesel generator plant consisting of five units, and this facility accounted for 9 MW of summer net capability.
TVA's transmission system has 69 interconnections with 13 neighboring electric systems and delivered approximately 163 billion kWh of electricity to TVA customers in 2022. In carrying out its responsibility for transmission grid reliability in the TVA service area, TVA has operated with 99.999 percent reliability since 2000 in delivering electricity to customers. See Item 2, Properties — Transmission Properties .
TVA's transmission system has 69 interconnections with 13 neighboring electric systems and delivered approximately 157 billion kWh of electricity to TVA customers in 2023. In carrying out its responsibility for transmission grid reliability in the TVA service area, the TVA transmission grid has operated with 99.999 percent reliability since 2000. See Item 2, Properties — Transmission Properties .
As is the case in other industrial sectors, TVA and other utilities are also facing more stringent requirements related to the protection of wetlands, reductions in storm water impacts from construction activities, 32 Table of Contents new water quality criteria for nutrients and other pollutants, new wastewater analytical methods, and changes in regulation of pesticide application.
Other Clean Water Act Requirements . As is the case in other industrial sectors, TVA and other utilities are also facing more stringent requirements related to the protection of wetlands, reductions in storm water impacts from construction activities, new water quality criteria for nutrients and other pollutants, new wastewater analytical methods, and changes in regulation of pesticide application.
At September 30, 2022, TVA's hydroelectric fleet consisted of 29 conventional hydroelectric dams throughout the Tennessee River system with 106 active generating units that accounted for 3,754 MW of summer net capability and three units at Wilbur Hydroelectric Facility: Units 1-3, that were in long-term outage and unavailable for service at September 30, 2022.
At September 30, 2023, TVA's hydroelectric fleet consisted of 29 conventional hydroelectric dams throughout the Tennessee River system with 106 active generating units that accounted for 3,739 MW of summer net capability. Wilbur Hydroelectric Facility Units 1-3 were in long-term outage and unavailable for service at September 30, 2023.
During 2022, long-term contracts made up 92 percent of coal purchases, and short-term contracts accounted for the remaining 8 percent. TVA plans to continue using contracts of various lengths, terms, and coal quality to meet its expected consumption and inventory requirements.
During 2023, long-term contracts made up 92 percent of coal purchases, and short-term contracts accounted for the remaining eight percent. TVA plans to continue using contracts of various lengths, terms, and coal quality to meet its expected consumption and inventory requirements.
Additionally, TVA has invested to increase energy efficiency in its operations and offers renewable energy programs. See Power Supply and Load Management Resources — Renewable Energy Resources . These changes support the broad electrification and carbon emission reduction efforts in other sectors of the economy. There are inherent challenges each year in both operations and asset changes.
Additionally, TVA continues to invest in energy efficiency in its operations and offers renewable energy programs. See Power Supply and Load Management Resources — Renewable Energy Resources . These changes support the broad electrification and carbon emission reduction efforts in other sectors of the economy. There are inherent challenges each year in both operations and asset changes.
These units are not currently dispatched for generation to the transmission grid. Raccoon Mountain Pumped-Storage Plant At September 30, 2022, TVA had four units at Raccoon Mountain Pumped-Storage Plant ("Raccoon Mountain") with a total net summer capability of 1,654 MW. These units are utilized to balance the transmission system as well as generate power.
These units are not currently dispatched for generation to the transmission grid. Hydroelectric Pumped-Storage At September 30, 2023, TVA had four units at Raccoon Mountain Pumped-Storage Plant ("Raccoon Mountain") with a total net summer capability of 1,700 MW. These units are utilized to balance the transmission system as well as generate power.
TVA is in the second year of a coalition of utilities and researchers, led by EPRI and Gas Technology Institute, whose purpose is to engage, inform, and support global low-carbon resources initiatives to develop the pathways for the advancement 23 Table of Contents of carbon reducing technologies for large scale utility deployment.
TVA is in the third year of a coalition of utilities and researchers, led by EPRI and the Gas Technology Institute, whose purpose is to engage, inform, and support global low-carbon resources initiatives to develop the pathways for the advancement of carbon reducing technologies for large scale utility deployment.
Natural Gas and Fuel Oil During 2022, TVA purchased a significant amount of its natural gas requirements from a variety of suppliers under contracts with terms of up to 2 years and purchased substantially all of its fuel oil requirements on the spot market .
Natural Gas and Fuel Oil During 2023, TVA purchased a significant amount of its natural gas requirements from a variety of suppliers under contracts with terms of up to three years and purchased substantially all of its fuel oil requirements on the spot market .
One of the priorities of the council is the Supplier Diversity Mentoring Program, which is designed to support and position diverse suppliers seeking to do business with TVA. Specific skills enhancements include: inventory management, technology integration, accounting practices, program implementation, and continuous improvement.
TVA has established a Supplier Diversity Stakeholder Advisory Council. One of the priorities of the council is the Supplier Diversity Mentoring Program, which is designed to support and position diverse suppliers seeking to do business with TVA. Specific skills enhancements include inventory management, technology integration, accounting practices, program implementation, and continuous improvement.
When these factors are unfavorable, TVA must increase its reliance on higher cost generation plants and purchased power. In addition, a portion of energy generated by nine U.S.
When these factors are unfavorable, TVA must increase its reliance on higher cost generation plants and purchased power. In addition, TVA receives a portion of energy generated by eight of the U.S.
At September 30, 2022, there were 642 generation sources, with a combined qualifying capacity of 278 MW, whose power TVA purchases under this program. Fuel Supply General TVA's consumption of various types of fuel depends largely on the demand for electricity by TVA's customers, the availability of various generating units, and the availability and cost of fuel.
At September 30, 2023, there were 955 generation sources, with a combined qualifying capacity of 285 MW, whose power TVA purchases under this program. Fuel Supply General TVA's consumption of various types of fuel depends largely on the demand for electricity by TVA's customers, the availability of various generating units, and the availability and cost of fuel.
Flood Control Activities The Tennessee River watershed has one of the highest annual rainfall totals of any watershed in the U.S., averaging 51 inches per year. During 2022, approximately 55 inches of rain fell in the Tennessee Valley.
Flood Control Activities The Tennessee River watershed has one of the highest annual rainfall totals of any watershed in the U.S., averaging 51 inches per year. During 2023, approximately 53 inches of rain fell in the Tennessee Valley.
Criminal penalties may also result from such violations. Finally, while not required to do so, TVA has elected to implement various FERC orders and regulations pertaining to public utilities on a voluntary basis to the extent that they are consistent with TVA's obligations under the TVA Act.
Criminal penalties may also result from such violations. Furthermore, while not required to do so, TVA has elected to implement various FERC orders and regulations pertaining to public utilities on a voluntary basis to the extent that they are consistent with TVA's obligations under the TVA Act. Finally, on July 28, 2023, FERC issued Order 2023.
In 2019, the EPA finalized the Affordable Clean Energy ("ACE") rule addressing greenhouse gas ("GHG") emissions from existing fossil fuel-fired units. The ACE rule established guidelines, under Section 111(d) of the CAA, for GHG emissions from existing coal-fired units based on efficiency improvements that can be achieved at those units at reasonable cost.
In 2019, the EPA finalized the Affordable Clean Energy ("ACE") rule addressing GHG emissions from existing fossil fuel-fired units. The ACE rule established guidelines, under Section 111(d) of the CAA, for GHG emissions from existing coal-fired units based on efficiency improvements that can be achieved at those units at reasonable cost. On January 19, 2021, the D.C.
Partnerships with Unions. TVA has a long-standing policy of acknowledging and working with recognized representatives of its employees, and that policy is reflected in long-term agreements to recognize the unions (or their successors) that represent TVA employees. TVA’s labor construct is complex and unique.
TVA has a long-standing policy of acknowledging and working with recognized representatives of its employees, and that policy is reflected in long-term agreements to recognize the unions (or their successors) that represent TVA employees. TVA’s labor construct is complex and unique and is primarily governed by the TVA Act.
As a Balancing Authority, Distribution Provider, Generator Owner, Generator Operator, Planning Coordinator, Reliability Coordinator, Resource Planner, Transmission Owner, Transmission Operator, Transmission Planner, and Transmission Service Provider, as those terms are defined for purposes of North American Electric Reliability Corporation ("NERC") regulations, TVA is also subject to federal reliability standards that are set forth by the NERC and approved by FERC.
As a Balancing Authority, Distribution Provider, Generator Owner, Generator Operator, Planning Coordinator, Reliability Coordinator, Resource Planner, Transmission Owner, Transmission Operator, Transmission Planner, and Transmission Service Provider, as those terms are defined for purposes of NERC regulations, TVA is also subject to federal reliability standards that are set forth by the NERC and approved by FERC. See Regulation .
For CY 2021, TVA's emissions of carbon dioxide ("CO 2 ") from its owned and operated units, including purchased power and REC retirement adjustments which reduce the reportable CO 2 emissions, were 50 million tons, resulting in a TVA system average, as delivered, CO 2 emission rate of 638 lbs/MWh.
For CY 2022, TVA's emissions of carbon dioxide ("CO 2 ") from its owned and operated units, including purchased power and REC retirement adjustments which reduce the reportable CO 2 emissions, were 54 million tons, resulting in a TVA system average, as delivered, CO 2 emission rate of 658 lbs/MWh.
At September 30, 2022, TVA's estimated liability for required cleanup and similar environmental work for those sites for which sufficient information was available to develop a cost estimate was approximately $17 million and was included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheet.
At September 30, 2023, TVA's estimated liability for required cleanup and similar environmental work for those sites for which sufficient information was available to develop a cost estimate was approximately $16 million and was included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets.
As a federal agency, TVA is exempt from regulation, control, and taxation by states except in certain areas where Congress has clearly made TVA subject to state regulation. See Environmental Matters below.
As a federal agency, TVA is exempt from regulation, control, and taxation by states except in certain areas where Congress has clearly made TVA subject to state regulation.
Power generating facilities operated by TVA at September 30, 2022, included three nuclear sites, 17 natural gas and/or oil-fired sites, five coal-fired sites, 29 conventional hydroelectric sites, one pumped-storage hydroelectric site, one diesel generator site, and 13 solar installations. See Item 2, Properties — Generating Properties — Net Capability for a discussion of the units at these facilities.
Power generating facilities operated by TVA at September 30, 2023, included three nuclear sites, 17 natural gas and/or oil-fired sites, four coal-fired sites, 29 conventional hydroelectric sites, one pumped-storage hydroelectric site, one diesel generator site, and nine operating solar installations. See Item 2, Properties — Generating Properties — Net Capability for a discussion of the units at these facilities.
To support and care for the well-being of employees and their families, examples of comprehensive and competitive benefits currently offered by TVA include: • medical, vision, dental, life, accident, and disability insurance • flexible spending accounts • tuition reimbursement • well-being incentives • employee assistance programs • behavioral and medical telemedicine • 401(k) retirement • family caregiving benefits • leave donation • dependent scholarship program • family building benefits • paid time-off • flexible work schedules • health savings account Development and Training.
To support and care for the well-being of employees and their families, TVA currently offers comprehensive and competitive benefits, including the following: • medical, vision, dental, life, accident, and disability insurance • flexible spending accounts • tuition reimbursement • well-being incentives • employee assistance programs • behavioral and medical telemedicine • 401(k) retirement • family caregiving benefits • leave donation • dependent scholarship program • family building benefits • maternity leave • paid parental leave • flexible work schedules • paid time-off • health savings account Development and Training.
TVA employees collectively came together to address business needs and enable strong performance while serving the 10 million people of the Tennessee Valley. As part of its People Advantage strategic priority, TVA strives to create a work environment that supports and responds 34 Table of Contents to the changing needs of the workforce.
TVA employees collectively align to address business needs together and enable strong performance while serving approximately 10 million people of the Tennessee Valley. As part of its People Advantage strategic priority, TVA strives to create a work environment that supports and responds to the changing needs of the workforce.
Those opportunities include: • individual learning-ability • team learning • mentoring • career pathing, including rotational development • professional, technical, and leadership career pathways • over 6,600 on-line learning courses TVA also invests in the development of its employees through tuition reimbursement for academic programs aligned with TVA’s business and workforce development needs.
Those opportunities include: • individual learning-ability • team learning • mentoring • career pathing, including rotational development • professional, technical, and leadership career pathways • 33 craft apprenticeship programs • over 15,300 on-line learning courses TVA also invests in the development of its employees through tuition reimbursement for academic programs aligned with TVA’s business and workforce development needs.
All of the power contracts between TVA and the LPCs require that power purchased from TVA be sold and distributed to the ultimate consumer without discrimination among consumers of the same class and prohibit direct or indirect discriminatory rates, rebates, or other special concessions.
TVA regulates LPCs primarily through the provisions of TVA's wholesale power contracts. All of the power contracts between TVA and the LPCs require that power purchased from TVA be sold and distributed to the ultimate consumer without discrimination among consumers of the same class and prohibit direct or indirect discriminatory rates, rebates, or other special concessions.
TVA is committed to investing in the future of nuclear and continues to evaluate the licensing and design of emerging nuclear technologies, such as advanced light water SMRs and advanced non-light water reactors, as part of technology innovation efforts aimed at developing the energy system of the future.
TVA is committed to investing in the future of nuclear and continues to evaluate the licensing and design of emerging nuclear technologies, such as advanced light water SMRs and advanced non-light water reactors, as part of technology innovation efforts aimed at developing the energy system of the future, one of TVA's strategic elements of Operational Excellence.
See Fuel Supply — Nuclear Fuel below for a discussion of spent nuclear fuel and low-level radioactive waste, Note 21 — Commitments and Contingencies — Contingencies for a discussion of TVA's nuclear decommissioning liabilities and the related trust and nuclear insurance, and Note 21 — Commitments and Contingencies — Legal Proceedings for a discussion of legal proceedings related to TVA's nuclear program, which discussions are incorporated herein by reference.
See Fuel Supply — Nuclear Fuel below for a discussion of spent nuclear fuel and low-level radioactive waste and Note 22 — Commitments and Contingencies — Contingencies for a discussion of TVA's nuclear decommissioning liabilities and the related trust and nuclear insurance, which discussions are incorporated herein by reference.
Beginning in 2020, TVA placed a high priority on providing research which aligns to and supports its six transformative initiatives: decarbonization, energy storage, electric vehicles, advanced nuclear, connected communities, and regional grid transformation.
Beginning in 2020, TVA placed a high priority on providing innovation and research which aligns to and supports its transformative initiatives: advanced nuclear, decarbonization, energy storage, regional grid transformation, electric vehicles, connected communities, and the newest - future grid performance.
During 2019, the TVA Board approved the opportunity for TVA to explore being directly involved in the development of a utility-scale solar project, contingent on the successful completion of environmental reviews under the National Environmental Policy Act ("NEPA") and other applicable laws.
During 2019, the TVA Board approved the opportunity for TVA to explore being directly involved in the development of a utility-scale solar project, contingent on the successful completion of environmental reviews under the National Environmental Policy Act ("NEPA") and other applicable laws. In 2021, TVA purchased land for this development, and in 2022, environmental reviews were complete.
TVA utilizes natural gas storage services at seven facilities with a total capacity of 7.25 billion per cubic feet ("Bcf") of firm service and 5.00 Bcf of interruptible service to manage the daily balancing requirements of the eight pipelines used by TVA, with approximately 59 percent of the total storage capacity being maintained at two facilities.
TVA utilizes natural gas storage services at seven facilities with a total capacity of 7.75 billion per cubic feet ("Bcf") of firm service and 6.275 Bcf of interruptible service to manage the daily balancing requirements of the eight pipelines used by TVA, with approximately 55 percent of the total storage capacity being maintained at two facilities.
To reduce NO x emissions, TVA operates SCRs on 18 coal-fired units, operates low-NO x burners or low-NO x combustion systems on 21 units, optimized combustion on all 25 units, and operates NO x control equipment year round when units are operating (except during start-up, shutdown, and maintenance periods). TVA has also retired 34 of 59 coal-fired units.
To reduce NO x emissions, TVA operates SCRs on 17 coal-fired units, operates low-NO x burners or low-NO x combustion systems on 20 units, optimized combustion on all 24 units, and operates NO x control equipment year round when units are operating (except during start-up, shutdown, and maintenance periods). TVA has also retired 35 of 59 coal-fired units.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf not effectively managed, foreign currency exposure could negatively impact TVA's counterparty risk, cash flows, results of operations, and financial condition. The market for TVA Bonds might be limited. Although many TVA Bonds are listed on stock exchanges, there can be no assurances that any market will develop or continue to exist for any Bonds.
Biggest changeThe value of the U.S. dollar compared with other currencies has fluctuated widely in recent years, including as a result of changes in political and economic conditions. If not effectively managed, foreign currency exposure could negatively impact TVA's counterparty risk, cash flows, results of operations, and financial condition. The market for TVA Bonds might be limited.
Occurrences that may prevent TVA from achieving its carbon reduction aspirations in a timely manner include, but are not limited to, the following: • Federal law or policy could restrict TVA's ability use natural gas or nuclear power, which are each essential for TVA to reduce its carbon emissions. • TVA may not receive timely approval from federal and state regulators for construction and operation of new natural gas assets and attendant infrastructure (e.g., pipelines). • TVA may have difficulty obtaining resources or labor needed to complete projects on time and within budget. • Legal challenges may slow or restrict TVA's ability to replace coal generation with cleaner forms of energy.
Occurrences that may prevent TVA from achieving its carbon reduction aspirations in a timely manner include, but are not limited to, the following: • Federal law or policy could restrict TVA's ability to use natural gas or nuclear power, which are each essential for TVA to reduce its carbon emissions. • TVA may not receive timely approval from federal and state regulators for construction and operation of new natural gas assets and attendant infrastructure (e.g., pipelines). • TVA may have difficulty obtaining resources or labor needed to complete projects on time and within budget. • Legal challenges may slow or restrict TVA's ability to replace coal generation with cleaner forms of energy.
Changes in interest rates may, variably, increase the amount of interest that TVA pays on new Bonds that it issues, decrease the return that TVA receives on short-term investments, decrease the value of the investments in the NDT, ART, pension fund, SERP, and DCP, increase the amount of collateral that TVA is required to post in connection with certain of its derivative transactions, increase the losses on the mark-to-market valuation of certain derivative transactions into which TVA has entered, or some combination of these.
Changes in interest rates may, variably, increase the amount of interest that TVA pays on new Bonds that it issues, decrease the return that TVA receives on short-term investments, decrease the value of the investments in the NDT, ART, pension fund, SERP, DCP, and RP, increase the amount of collateral that TVA is required to post in connection with certain of its derivative transactions, increase the losses on the mark-to-market valuation of certain derivative transactions into which TVA has entered, or some combination of these.
TVA's nature as a quasi-governmental entity imposes additional pressures that most companies do not face, including most significantly the requirements to support economic development, simultaneously manage a river system for commerce, recreation, flood control, and power generation, and promote recreational opportunities within its service territory. TVA funds these operations almost entirely from the sale of electricity.
TVA's nature as a governmental entity imposes additional pressures that most companies do not face, including most significantly the requirements to support economic development, simultaneously manage a river system for commerce, recreation, flood control, and power generation, and promote recreational opportunities within its service territory. TVA funds these operations almost entirely from the sale of electricity.
Although it is difficult to predict new laws, regulations, or administrative or executive orders or congressional action or inaction, or how such laws, regulation, orders, actions, or inactions may impact TVA, some of the possible effects are described below. TVA may lose its protected service territory. TVA’s service area is defined primarily by provisions of law and long-term contracts.
Although it is difficult to predict new laws, regulations, or administrative or executive orders, or congressional action or inaction, or how such laws, regulation, orders, actions, or inactions may impact TVA, some of the possible effects are described below. TVA could lose its protected service territory. TVA’s service area is defined primarily by provisions of law and long-term contracts.
If no such site is forthcoming or if no alternative disposal or reuse plan were developed, then TVA might be required to arrange for the safe and permanent disposal of the spent fuel itself. Such a requirement would cause TVA to incur substantial expense, including substantial capital expenditures, and could cause TVA to change how it operates its nuclear plants.
If no such site is forthcoming or if no alternative disposal or reuse plan were developed, TVA might be required to arrange for the safe and permanent disposal of the spent fuel itself. Such a requirement would cause TVA to incur substantial expense, including substantial capital expenditures, and could cause TVA to change how it operates its nuclear plants.
In making this determination, TVA took various factors into consideration, including the anticipated availability of its nuclear units, the availability of non-nuclear facilities, the forecasted cost of natural gas and coal, the forecasted demand for electricity, achievement of its carbon reduction aspirations, and environmental compliance including the expense of adding air pollution controls to its coal-fired units.
In making this determination, TVA took various factors into consideration, including the anticipated availability of its nuclear units, the availability of non-nuclear facilities, the forecasted cost of natural gas and coal, the forecasted demand for electricity, its carbon reduction aspirations, and environmental compliance including the expense of adding air pollution controls to its coal-fired units.
TVA's debt ceiling could limit TVA's ability to carry out its business in the event that TVA were to approach or reach it. Approaching or reaching the debt ceiling may negatively affect TVA's business by limiting TVA's ability to access capital markets and by increasing the amount of debt TVA must service without new debt capital.
TVA's debt ceiling may limit TVA's ability to carry out its business in the event that TVA were to approach or reach it. Approaching or reaching the debt ceiling may negatively affect TVA's business by limiting TVA's ability to access capital markets and by increasing the amount of debt TVA must service without new debt capital.
The ultimate resolution of matters relating to CCR obligations could have a material adverse effect on TVA's cash flows, results of operation, and financial condition. Physical attacks, threats, or other interference may damage or interfere with TVA's facilities and operations.
The ultimate resolution of matters relating to CCR obligations could have a material adverse effect on TVA's cash flows, results of operation, and financial condition. Physical attacks, threats, or other interference could damage or interfere with TVA's facilities and operations.
As a quasi-governmental entity, TVA has certain legal requirements that prevent it from responding as quickly to potential changes in the market or requests from current or potential customers as might be desired or in comparison to other utilities.
As a governmental entity, TVA has certain legal requirements that prevent it from responding as quickly to potential changes in the market or requests from current or potential customers as might be desired or in comparison to other utilities.
TVA's reputation could be harmed by a variety of factors, including: failure of a generating asset or supporting infrastructure; failure to effectively manage land and other natural resources entrusted to TVA; real or perceived violations of environmental regulations, including those related to climate change; real or perceived issues with TVA's safety culture or work environment; inability to meet its human capital management goals; inability to keep its electricity rates stable; involvement in a class-action or other high-profile lawsuit; significant delays in construction projects; occurrence of or responses to cyber attacks or security vulnerabilities; acts or omissions of TVA management or acts or omissions of a contractor or other third-party working with or for TVA, which actually or perceivably reflect negatively on TVA; measures taken to offset reductions in demand or to supply rising demand; or a significant dispute with one of TVA's customers.
TVA's reputation could be harmed by a variety of factors, including failure of a generating asset or supporting infrastructure; failure to effectively manage land and other natural resources entrusted to TVA; real or perceived violations of environmental regulations, including those related to climate change; real or perceived issues with TVA's safety culture or work environment; inability to meet its human capital management goals; inability to meet its carbon reduction aspirations; inability to keep its electricity rates stable; involvement in a class-action or other high-profile lawsuit; significant delays in construction projects; occurrence of or responses to cyber attacks or security vulnerabilities; acts or omissions of TVA management or acts or omissions of a contractor or other third-party working with or for TVA, which actually or perceivably reflect negatively on TVA; measures taken to offset reductions in demand or to supply rising demand; or a significant dispute with one of TVA's customers.
No financial control system, no matter how well designed and operated, can provide absolute assurance that the objectives of the control system will be met, and no evaluation of financial controls can provide absolute assurance that all control issues and instances of fraud or errors can or will be detected.
No financial control system, no matter how well designed and operated, can provide absolute assurance that the objectives of the control system will be met, and no evaluation of financial controls can provide absolute assurance that all control issues and instances of fraud or errors can or will be prevented or detected.
Possible areas of future laws or regulations include, but are not limited to, GHGs, CCR, ELGs, water quality, renewable energy portfolio standards, and natural gas production and transmission.
Possible areas of future laws or regulations include, but are not limited to, GHGs, CCR, ELGs, water quality, air quality, renewable energy portfolio standards, and natural gas production and transmission.
TVA's financial condition and results of operations are largely dependent on the extent to which it can implement its business strategy successfully. TVA's strategy includes maintaining low rates, aligning operations and maintenance spending with revenues, being responsible stewards, living within its means, meeting reliability expectations, and providing a balanced portfolio, in light of TVA's strategic priorities.
TVA's financial condition and results of operations are largely dependent on the extent to which it can implement its business strategy successfully. TVA's strategy includes maintaining low rates, aligning operations and maintenance costs with revenues, being responsible stewards, living within its means, meeting reliability expectations, and providing a balanced portfolio, in light of TVA's strategic priorities.
TVA's quasi-governmental status may interfere with its ability to quickly respond to the needs of its current or potential customers or to act solely in the interest of its ratepayers.
TVA's governmental status may interfere with its ability to quickly respond to the needs of its current or potential customers or to act solely in the interest of its ratepayers.
These events individually or in the aggregate could also have a material adverse effect on TVA’s cash flows, results of operations, and financial condition.
These events individually or in the aggregate could have a material adverse effect on TVA’s cash flows, results of operations, and financial condition.
TVA maintains a Nuclear Decommissioning Trust ("NDT") for the purpose of providing funds to decommission its nuclear facilities. The NDT is invested in securities generally designed to achieve a return in line with overall equity and debt market performance. See Note 16 — Fair Value Measurements — Investment Funds for the NDT balance at September 30, 2022 .
TVA maintains a Nuclear Decommissioning Trust ("NDT") for the purpose of providing funds to decommission its nuclear facilities. The NDT is invested in securities generally designed to achieve a return in line with overall equity and debt market performance. See Note 16 — Fair Value Measurements — Investment Funds for the NDT balance at September 30, 2023 .
This situation would be aggravated during periods of reduced rainfall or drought. • Changes in the climate may make, or may be making, such shifts in weather more common or extreme. Climate change may cause catastrophic events like droughts, floods, wildfires, and snow or ice storms to occur more frequently in the Tennessee Valley region.
This situation would be aggravated during periods of reduced rainfall or drought. • Changes in the climate may make, or may be making, such shifts in weather more common or extreme. Climate change may cause catastrophic events like droughts, floods, wildfires, heat waves, and snow or ice storms to occur more frequently in the Tennessee Valley region.
Such an impairment would likely have a negative impact on TVA's ability to respond to significant changes in technology, the regulatory environment, or the industry overall and, in turn, negatively affect TVA's cash flows, results of operations, financial condition, and reputation. The TVA Board currently has five members.
Such an impairment would likely have a negative impact on TVA's ability to respond to significant changes in technology, the regulatory environment, or the industry overall and, in turn, negatively affect TVA's cash flows, results of operations, financial condition, and reputation. The TVA Board currently has nine members.
Such cancellation or delays may result from, among other things, changes in market conditions, changes in laws or regulations, lack of productivity, human error, supply chain challenges, and the failure to schedule activities properly, TVA's inability to obtain the necessary regulatory approvals or licenses, TVA's decision to cancel construction of a facility or cancel another type of project, including due to delays, cost overruns, or changes in customer preferences, or changes in requirements applicable to how TVA conducts construction, repair, or closure activities.
Such cancellation or delays may result from, among other things, changes in market conditions, changes in laws or regulations, lack of productivity, human error, supply chain challenges, regional health emergencies, and the failure to schedule activities properly, TVA's inability to obtain the necessary regulatory approvals or licenses, TVA's decision to cancel construction of a facility or cancel another type of project, including due to delays, cost overruns, or changes in customer preferences, or changes in requirements applicable to how TVA conducts construction, repair, or closure activities.
Cyber attacks may result in security breaches that may be detrimental to TVA operations, including third parties improperly accessing TVA's system and demanding ransom based on threats to expose sensitive data, including data from employees, customers, and financial parties, to gain operational control, or to expose security vulnerabilities specific to TVA’s facilities.
Cyber attacks may result in security breaches that may be detrimental to TVA's operations, including third parties' improperly accessing TVA's system and demanding ransom based on threats to expose sensitive data, including data from employees, customers, and financial parties, to gain operational control, or to expose security vulnerabilities specific to TVA’s facilities.
These challenges may, for instance, come in the form of direct legal challenges to TVA projects or through challenges to TVA's attempts to obtain necessary licenses and permits. • Potential delays in projects, along with now-anticipated load growth, may force TVA to rely on coal powered generation more heavily, or longer, than it had previously projected. • As to TVA's longer term carbon reduction aspirations, the development of new technology necessary to meet these aspirations may not occur as quickly, feasibly, or cost-effectively as necessary. • TVA's unique federal least-cost planning obligations may prevent TVA from moving forward with carbon-free generation as quickly as utilities that do not have the same requirements.
These challenges may, for instance, come in the form of direct legal challenges to TVA projects or through challenges to TVA's environmental reviews or TVA's attempts to obtain necessary licenses and permits. • Potential delays in projects, along with now-anticipated load growth, may force TVA to rely on coal-fired generation more heavily, or longer, than it had previously projected. • As to TVA's longer term carbon reduction aspirations, the development of new technology necessary to meet these aspirations may not occur as quickly, feasibly, or cost-effectively as necessary. • TVA's unique federal least-cost planning obligations may prevent TVA from moving forward with carbon-free generation as quickly as utilities that do not have the same requirements.
If TVA were unable to compensate for the resulting 49 Table of Contents decrease in demand for TVA electricity, TVA's cash flows, results of operations, and financial condition could be negatively impacted, likely resulting in higher rates and changes to TVA's operations. Increased Energy Efficiency and Conservation .
If TVA were unable to compensate for the resulting 52 Table of Contents decrease in demand for TVA electricity, TVA's cash flows, results of operations, and financial condition could be negatively impacted, likely resulting in higher rates and changes to TVA's operations. Increased Energy Efficiency and Conservation .
These events, the frequency and severity of which are unpredictable, may, among other things, limit or disrupt TVA's ability to generate and transmit power; lead to legislative or regulatory changes that affect the construction, operation, and decommissioning of nuclear units and the storage of spent fuel; limit or disrupt TVA's ability to provide flood control and river management; reduce the demand for power; disrupt fuel or other supplies; require TVA to produce additional tritium; cause or exacerbate an economic downturn; require TVA to make substantial capital investments for repairs, improvements, or modifications; or cause or exacerbate instability in the financial markets.
These events, the frequency and severity of which are unpredictable, may, among other things, limit or disrupt TVA's ability to generate and transmit power; lead to legislative or regulatory changes that affect the construction, operation, and decommissioning of nuclear units and the storage of spent fuel; limit or disrupt TVA's ability to provide flood control and river management; reduce the demand for power; disrupt fuel or other supplies; require TVA to produce additional tritium; cause or exacerbate an economic downturn; require TVA to make substantial capital investments for repairs, improvements, or modifications; negatively affect the cost or availability of insurance; or cause or exacerbate instability in the financial markets.
Payment of principal and interest on TVA securities is not guaranteed by the U.S government. Although TVA is a corporate agency and instrumentality of the U.S. government, TVA securities are not backed by the full faith and credit of the United States. Principal and interest on TVA securities are payable solely from TVA's net power proceeds.
Payment of principal and interest on TVA securities is not guaranteed by the U.S government. Although TVA is a corporate agency and instrumentality of the U.S. government, TVA securities are not backed by the full faith and credit of the U.S. Principal and interest on TVA securities are payable solely from TVA's net power proceeds.
See Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive orders regarding climate change.
See Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive actions regarding climate change.
This occurrence may restrict TVA's ability to raise debt capital to acquire new power program assets or maintain existing ones, to carry out upgrades or improvements to existing assets or build new ones, to purchase power under long-term power purchase agreements, or to meet regulatory requirements.
This occurrence may restrict TVA's ability to raise debt capital to acquire new power program assets or maintain existing ones, to carry out upgrades or improvements to existing assets or build new ones, to purchase power under long-term PPAs, or to meet regulatory requirements.
The failure of TVA's assets or supporting infrastructure, including information technology systems, to perform as planned may cause health, safety, or environmental problems and may even result in events such as the failure of a dam, the inability to maintain a reservoir 42 Table of Contents at the normal or expected level, or an incident at a coal-fired, gas-fired, or nuclear plant or a CCR facility.
The failure of TVA's assets or supporting infrastructure, including information technology systems, to perform as planned may cause health, safety, or environmental problems and may even result in events such as the failure of a dam, the inability to maintain a reservoir at the normal or expected level, or an incident at a coal-fired, gas-fired, or nuclear plant or a CCR facility.
ITEM 1A. RISK FACTORS The risk factors described below, as well as the other information included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (the "Annual Report"), should be carefully considered.
ITEM 1A. RISK FACTORS The risk factors described below, as well as the other information included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the "Annual Report"), should be carefully considered.
Loss of Customers . TVA could lose customers, particularly LPCs, if customers were to choose another utility to meet some or all of their power needs where available, pursue self-generation to meet some or all of their power needs, or move their operations outside of TVA's service territory.
Loss of Customers . TVA could lose customers if customers were to choose another utility to meet some or all of their power needs where available, pursue self-generation to meet some or all of their power needs, or move their operations outside of TVA's service territory.
RISKS RELATED TO THE ENVIRONMENT AND CATASTROPHIC EVENTS Weather conditions may hamper TVA's ability to supply power or negatively impact net revenue, and weather conditions may cause customers' demands for power to exceed TVA's then-present power supply capabilities.
RISKS RELATED TO THE ENVIRONMENT AND CATASTROPHIC EVENTS Weather conditions may hamper TVA's ability to supply power or negatively impact net revenue, and weather conditions may cause customers' demand for power to exceed TVA's then-present power supply capabilities.
For a discussion of certain current material legal proceedings, see Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges and Note 21 — Commitments and Contingencies — Legal Proceedings .
For a discussion of certain current material legal proceedings, see Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges and Note 22 — Commitments and Contingencies — Legal Proceedings .
Although the plan has been frozen to new participants since July 1, 2014, TVA's payment obligation under the pension plan is substantial and changes in any one or more of these factors could cause TVA's benefit expenditures under the plan to increase and significantly exceed TVA's planned contributions.
Although the 50 Table of Contents plan has been frozen to new participants since July 1, 2014, TVA's payment obligation under the pension plan is substantial, and changes in any one or more of these factors could cause TVA's benefit expenditures under the plan to increase and significantly exceed TVA's planned contributions.
These activities involve risks of overruns in the cost of labor and materials, as well 40 Table of Contents as potential delays, in beginning or completing these repairs, closures, or other projects. Further cancellation or delay of projects related to these activities may adversely affect TVA's cash flows, financial condition, and results of operations.
These activities involve risks of overruns in the cost of labor and materials, as well as potential delays, in beginning or completing these repairs, closures, or other projects. Further cancellation or delay of projects related to these activities may adversely affect TVA's cash flows, financial condition, and results of operations.
Any of these potential outcomes may negatively affect TVA's cash flows, results of operations, financial condition, and reputation. TVA's operations present significant safety risks that are not able to be completely eliminated. TVA's safety program, no matter how well designed and operated, may not completely prevent accidents.
Any of these potential outcomes may negatively affect TVA's cash flows, results of operations, financial condition, and reputation. 49 Table of Contents TVA's operations present significant safety risks that are not able to be completely eliminated. TVA's safety program, no matter how well designed and operated, may not completely prevent accidents.
Further, limitations on global trade resulting from COVID-19 or limitations on global shipping could materially decrease the availability or increase the cost of necessary or desired equipment. TVA may not be able to operate one or more of its nuclear power units.
Further, limitations on global trade resulting from the Coronavirus Disease 2019 ("COVID-19") or limitations on global shipping could materially decrease the availability or increase the cost of necessary or desired equipment. TVA may not be able to operate one or more of its nuclear power units.
If FERC were to limit the application of the anti-cherrypicking provision or if federal legislation 45 Table of Contents were to eliminate or limit the application of the anti-cherrypicking provision without corresponding legislative modifications to the territorial limitations imposed by the fence, TVA's ability to respond to any resulting customer attrition would be constrained.
If FERC were to limit the application of the anti-cherrypicking provision or if federal legislation were to eliminate or limit the application of the anti-cherrypicking provision without corresponding legislative modifications to the territorial limitations imposed by the fence, TVA's ability to respond to any resulting customer attrition would be constrained.
Because of TVA's status as a government corporation and TVA's role as predominantly the sole power provider for its service territory, individuals, groups, or nation states may target TVA with physical attacks or threats of such attacks.
Because of TVA's status as a government corporation and TVA's role as the primary power provider for its service territory, individuals, groups, or nation states may target TVA with physical attacks or threats of such attacks.
In addition, although TVA is not required to make contributions to the ART, it may choose to do so, particularly if TVA's estimates of its non-nuclear asset retirement obligation liabilities were to increase. TVA may also choose to make contributions to the SERP and DCP from time to time. Interest Rate Risk .
In addition, although TVA is not required to make contributions to the ART, it may choose to do so, 53 Table of Contents particularly if TVA's estimates of its non-nuclear asset retirement obligation liabilities were to increase. TVA may also choose to make contributions to the SERP, DCP, and RP from time to time. Interest Rate Risk .
Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, incur additional capital or operational expense, change how it operates its fossil-fueled units, cease construction of new natural gas-fired plants, reduce emissions to a greater extent than TVA had planned, close existing CCR facilities sooner than planned, build new CCR facilities sooner than planned, build new CCR facilities that were not planned, cease operation of some coal-fired units, adjust its rates, or terminate or modify contracts.
Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, incur additional capital or operational expense, change how it operates its fossil-fueled units, cease construction of new natural gas-fired plants, reduce 43 Table of Contents emissions to a greater extent than TVA had planned, close existing CCR facilities sooner than planned, close existing CCR facilities using a different methodology than planned, build new CCR facilities sooner than planned, build new CCR facilities that were not planned, cease operation of some coal-fired units, adjust its rates, or terminate or modify contracts.
Any deterioration in TVA's reputation may harm TVA's relationships with its customers and stakeholders, may increase its cost of doing business, may interfere with its ability to attract and retain a qualified, inclusive, and diverse workforce, may impact TVA's ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way TVA conducts its business.
Any deterioration in TVA's reputation may harm TVA's relationships with its customers and stakeholders, may increase its cost of doing business, may interfere with its ability to attract and retain a qualified, inclusive, and diverse workforce, may impact TVA's ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way TVA conducts its business. 57 Table of Contents ITEM 1B.
The additional proceedings could involve, among other things, challenges to TVA’s CCR facilities, challenges to TVA's natural gas-fired plants and related pipelines, nuisance suits involving TVA’s coal-fired plants, challenges to the anti-cherrypicking provision, challenges under NEPA, and challenges to TVA’s authority to set rates and enter into contracts.
The additional proceedings could involve, among other things, challenges to TVA’s CCR facilities, challenges to TVA's natural gas-fired plants and related pipelines, nuisance suits involving TVA’s coal-fired plants, challenges to the anti-cherrypicking provision, challenges under NEPA, challenges under the Freedom of Information Act, and challenges to TVA’s authority to set rates and enter into contracts.
This disruption could interfere with TVA’s ability to perform its obligations to others, transfer funds, obtain fuel or critical parts, supplies, or services, or make payments, which in turn could negatively affect TVA’s cash flow, results of operation, financial condition, and reputation.
This disruption could interfere with TVA’s ability to perform its obligations to others, transfer funds, obtain fuel or critical parts, supplies, or services, or make payments, which in turn could negatively affect TVA’s cash flows, results of operations, financial condition, and reputation.
In 43 Table of Contents addition, any disruption of TVA's supplies could require TVA to operate higher cost generation assets, thereby negatively affecting TVA's cash flows, results of operations, and financial condition.
In addition, any disruption of TVA's supplies could require TVA to operate higher cost generation assets, thereby negatively affecting TVA's cash flows, results of operations, and financial condition.
Downgrades of TVA’s credit ratings may have material adverse effects on TVA’s cash flows, results of operations, and financial condition, as well as on investors in TVA securities. Among other things, a downgrade could increase TVA’s interest expense by increasing the interest rates that TVA pays on new debt securities that it issues.
Downgrades of TVA’s credit ratings, particularly downgrades related to TVA-specific factors, may have material adverse effects on TVA’s cash flows, results of operations, and financial condition, as well as on investors in TVA securities. Among other things, a downgrade could increase TVA’s interest expense by increasing the interest rates that TVA pays on new debt securities that it issues.
Examples of circumstances that may disrupt, or materially increase the cost of, the future delivery of fuel, purchased power, contracted services, or other critical supplies include but are not limited to physical attacks or cyber attacks; political developments, international trade restrictions or tariffs, or legal actions; mine closures or reduced mine production; increase in demand for power by other power systems which reduces the amount of power that is available for purchase by TVA; increases in fuel exports; environmental regulations affecting TVA's suppliers; or transportation or delivery constraints, including the failure of suppliers to timely deliver the services or supplies to TVA at budgeted costs due to force majeure events, shortages of raw materials, supply chain difficulties, increased cost of components and labor, availability of personnel being impacted by COVID-19, strikes, inflation, or similar events.
Examples of circumstances that may disrupt, or materially increase the cost of, the future delivery of fuel, purchased power, contracted services, or other critical supplies include but are not limited to cyber attacks; war or physical attacks, including the wars in Ukraine and Israel; political developments, international trade restrictions or tariffs, or legal actions; mine closures or reduced mine production; increase in demand for power by other power systems which reduces the amount of power that is available for purchase by TVA; increases in fuel exports; environmental regulations affecting TVA's suppliers; or transportation or delivery constraints, including the failure of suppliers to timely deliver the services or supplies to TVA at budgeted costs due to force majeure events, shortages of raw materials, supply chain difficulties, increased cost of components and labor, strikes or work stoppages, inflation, availability of personnel being impacted by regional health emergencies, or similar events.
Because TVA is a corporate agency and instrumentality established by federal law, it may be affected by a variety of laws, regulations, and administrative or executive orders that do not directly apply to other electric utilities.
Because TVA is a corporate agency and instrumentality established by federal law, it may be affected by a variety of laws, regulations, and administrative or executive orders that do not directly apply to other electric utilities and may be subject to potential stakeholder activism.
Additionally, the theft, damage, or improper disclosure of sensitive data may subject TVA to penalties and claims from third parties or increased government oversight. Cyber attacks on third parties could interfere with or harm TVA.
Additionally, the theft, damage, or improper disclosure of sensitive data may subject TVA to penalties and claims from third parties or increased government oversight. Cyber attacks on third parties or the failure of their technology infrastructure could interfere with or harm TVA.
TVA may become subject to additional NERC requirements. TVA is subject to federal reliability standards that are set forth by NERC and approved by FERC. TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems.
TVA may become subject to additional NERC requirements. 44 Table of Contents TVA is subject to federal reliability standards that are set forth by NERC and approved by FERC. TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems.
Demand by customers for power that is largely or exclusively generated from renewable sources may currently or in the future exceed TVA's ability to produce such power, and TVA might be compelled to change how it operates and may incur additional expense in meeting this demand. Increased Utilization of DER .
Demand by customers for power that is largely or exclusively generated from renewable sources may currently or in the future exceed TVA's ability to produce such power or to maintain reliability consistent with customer expectations, and TVA might be compelled to change how it operates and may incur additional expense in meeting this demand. Increased Utilization of DER.
With TVA's seven reactors, the maximum total contingent obligation per incident is $963 million. This retrospective premium is payable at a maximum rate currently set at approximately $20 million per year, per incident, per reactor.
With TVA's seven reactors, the maximum total contingent obligation per incident is $963 million. This retrospective premium is payable at a maximum rate 47 Table of Contents currently set at approximately $20 million per year, per incident, per reactor.
TVA has also been involved in litigation related to certain CCR facilities, and to resolve one such lawsuit, TVA agreed to remove or beneficially reuse some CCR material at Gallatin Fossil Plant ("Gallatin").
TVA has also been involved in litigation related to certain CCR facilities, and to resolve one such lawsuit, TVA agreed to remove or beneficially reuse significant amounts of CCR material at Gallatin Fossil Plant ("Gallatin").
CYBERSECURITY RISKS TVA’s facilities and information infrastructure may not operate as planned due to cyber threats to TVA’s assets and operations. TVA’s operations are heavily computerized and include assets such as information technology and networking systems.
CYBERSECURITY AND INFORMATION TECHNOLOGY RISKS TVA’s facilities and information infrastructure may not operate as planned due to cyber threats to TVA’s assets and operations. 45 Table of Contents TVA’s operations are heavily computerized and include assets such as information technology and networking systems.
Further, as discussed below, not being able to operate all of TVA's nuclear units may cause TVA to rely more on forms of generation that produce more carbon, thus making it more difficult for TVA to meet its carbon reduction aspirations or meet reliability goals. TVA's management and operation of CCR facilities expose it to additional costs and risks.
Not being able to operate all of TVA's nuclear units may cause TVA to rely more on forms of generation that produce more carbon, thus making it more difficult for TVA to meet its carbon reduction aspirations or meet reliability goals. 48 Table of Contents TVA's management and operation of CCR facilities expose it to additional costs and risks.
For ease of reference, the risk factors are presented in nine categories: (1) operational risks; (2) regulatory, legislative, and legal risks; (3) cybersecurity risks; (4) financial, economic, and market risks; (5) human capital and management risks; (6) risks related to the environment and catastrophic events; (7) accounting and financial reporting risks; (8) COVID-19 related risks; and (9) general risk factors.
For ease of reference, the risk factors are presented in eight categories: (1) regulatory, legislative, and legal risks; (2) cybersecurity and information technology risks; (3) operational risks; (4) financial, economic, and market risks; (5) human capital and management risks; (6) risks related to the environment and catastrophic events; (7) accounting and financial reporting risks; and (8) general risk factors.
As of November 14, 2022, TVA had wholesale power contracts with 153 LPCs, and 80 LPCs had entered into Power Supply Flexibility Agreements with TVA that allow the LPCs 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.
As of September 30, 2023, TVA had wholesale power contracts with 153 LPCs, and 89 LPCs had entered into Power Supply Flexibility Agreements with TVA that allow the LPCs 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.
If TVA were to have to make additional contributions to the NDT, the contributions may negatively affect TVA's cash flows, results of operations, and financial condition. Increased Regulation .
If TVA were to have to make additional contributions to the NDT, the contributions may negatively affect TVA's cash flows, results of operations, and financial condition. Regulatory Risks .
On September 30, 2022, TVA's qualified pension plan had assets of approximately $8.1 billion compared to liabilities of approximately $10.5 billion. The plan is mature with approximately 22,000 retirees and beneficiaries receiving benefits of over $700 million per year.
On September 30, 2023, TVA's qualified pension plan had assets of approximately $8.1 billion compared to liabilities of approximately $10.1 billion. The plan is mature with approximately 22,000 retirees and beneficiaries receiving benefits of approximately $750 million per year.
TVA's cash flows, results of operations, and financial condition may be adversely affected, either directly or indirectly, by catastrophic events such as fires, earthquakes, explosions, solar events, electromagnetic pulses ("EMPs"), geomagnetic disturbances, droughts, floods, hurricanes, tornadoes, polar vortexes, icing events, or other casualty events, wars, national emergencies, terrorist activities, pandemics, or other similar destructive or disruptive events.
TVA's cash flows, results of operations, and financial condition may be adversely affected, either directly or indirectly, by catastrophic events such as fires, earthquakes, explosions, solar events, electromagnetic pulses, geomagnetic disturbances, droughts, floods, hurricanes, tornadoes, polar vortexes, icing events, pipeline explosions, or other casualty events, wars, national emergencies, terrorist activities, pandemics or epidemics, widespread public health crises, geopolitical conflicts, or other similar destructive or disruptive events.
Unfavorable financial market conditions, including those arising from the COVID-19 pandemic, may cause lower-than expected rates of return on plan assets, loss in value of the investments, and lower discount rates used in determining future benefit obligations.
Unfavorable financial market conditions, including those arising from inflation and changes in interest rates, may cause lower-than expected rates of return on plan assets, loss in value of the investments, and lower discount rates used in determining future benefit obligations.
The economic wake of the COVID-19 pandemic, as well as geopolitical developments involving Russia and/or China, could have adverse effects on the U.S. and global economies that may indirectly impact TVA’s financial condition and results of operations due to the nature of TVA’s business. • Renewed economic downturns or a recession in TVA’s service area or other parts of the United States could reduce overall demand for power and thus reduce TVA’s power sales and cash flows, especially if TVA’s industrial customers were to reduce their operations and thus their consumption of power. • TVA could be further adversely affected by a downturn in the economy and financial markets, including differences in the recovery of specific economic sectors or regions of the Tennessee Valley and continued volatility in interest rates, commodity prices, investment performance, and foreign currency exchange rates. • An extended slowdown in the recovery of the United States’ economic growth, changes in the demand for commodities, or material changes in governmental policy could result in lower economic growth and thus lower demand for electricity in TVA’s key markets. • Contractual counterparties could be impaired in their ability to perform their obligations to TVA, or may choose to abandon contracts, which could result in more costly operation of TVA’s facilities.
Uncertainty in the macroeconomic environment, including the effects of increased inflationary pressures and interest rates, potential economic downturns or recessions, geopolitical pressures, and pandemics and regional health emergencies, could have adverse effects on the U.S. and global economies that may indirectly impact TVA’s financial condition and results of operations due to the nature of TVA’s business. • Renewed economic downturns or a recession in TVA’s service area or other parts of the United States could reduce overall demand for power and thus reduce TVA’s power sales and cash flows, especially if TVA’s industrial customers were to reduce their operations and thus their consumption of power. • TVA could be further adversely affected by a downturn in the economy and financial markets, including differences in the recovery of specific economic sectors or regions of the Tennessee Valley and continued volatility in interest rates, commodity prices, investment performance, and foreign currency exchange rates. • An extended slowdown in the recovery of the United States’ economic growth, changes in the demand for commodities, or material changes in governmental policy could result in lower economic growth and thus lower demand for electricity in TVA’s key markets. • Contractual counterparties could be impaired in their ability to perform their obligations to TVA, or may choose to abandon contracts, which could result in more costly operation of TVA’s facilities.
TVA uses certain assumptions that are presently justifiable in order to develop its plans for the future. Such assumptions include economic forecasts, anticipated energy and commodity prices, cost estimates, construction schedules, power demand forecasts, the appropriate generation mix to meet demand, and potential regulatory environments.
TVA relies on certain assumptions about the future that may turn out to be inaccurate. TVA uses certain assumptions that are presently justifiable in order to develop its plans for the future. Such assumptions include economic forecasts, anticipated energy and commodity prices, cost estimates, construction schedules, power demand forecasts, the appropriate generation mix to meet demand, and potential regulatory environments.
If the TVA Board were to lose this authority, or if such authority were to be restricted, such as through becoming subject to an external review process or other regulatory oversight, such an occurrence could result in material adverse impacts on TVA’s ability to meet financial obligations, operate its system in a manner that it considers most efficient or appropriate, and adapt its business to changing circumstances. 46 Table of Contents Loss of TVA’s Authority to Manage the Tennessee River System.
If the TVA Board were to lose this authority, or if such authority were to be restricted, such as through becoming subject to an external review process or other regulatory oversight, such an occurrence could result in material adverse impacts on TVA’s ability to meet financial obligations, operate its system in a manner that it considers most efficient or appropriate, or adapt its business to changing circumstances, and could potentially result in stranded costs.
Treasury might, as part of an effort to control cash disbursements, attempt to require TVA to receive approval before disbursement of funds from TVA’s U.S. Treasury account.
Treasury approach its debt ceiling, the U.S. Treasury might, as part of an effort to control cash disbursements, attempt to require TVA to receive approval before disbursement of funds from TVA’s U.S. Treasury account.
A downgrade below a contractual threshold may specifically prevent TVA from borrowing under four credit facilities totaling $2.7 billion or posting letters of 48 Table of Contents credit as collateral under these facilities. As of September 30, 2022, there were $704 million of letters of credit outstanding under these facilities.
A downgrade below a contractual threshold may specifically prevent TVA from borrowing under four credit facilities totaling $2.7 billion or posting letters of credit as collateral under these facilities. As of September 30, 2023, there were $535 million of letters of credit outstanding under these facilities.
TVA's financial control system cannot guarantee that all control issues and instances of fraud or errors will be detected.
ACCOUNTING AND FINANCIAL REPORTING RISKS TVA's financial control system cannot guarantee that all control issues and instances of fraud or errors will be prevented or detected.
For example, TVA is required to comply with the National Environmental Policy Act ("NEPA"), which 44 Table of Contents requires environmental reviews to be performed in connection with certain projects. The delay in responding to requests could damage relationships with current customers, deter potential customers from moving into TVA's service territory, or damage TVA's reputation.
For example, TVA is required to comply with the National Environmental Policy Act ("NEPA"), which requires environmental reviews to be completed before TVA decides to pursue certain projects. The delay in responding to requests could damage relationships with current customers, deter potential customers from moving into TVA's service territory, or damage TVA's reputation.
Circumstances may arise that result in TVA changing its mix of generation assets. TVA has determined that its power generation assets should consist of a mix of nuclear, coal-fired, natural gas-fired, and renewable power sources, including hydroelectric.
TVA has determined that its power generation assets should consist of a mix of nuclear, coal-fired, natural gas-fired, and renewable power sources, including hydroelectric.
TVA has been storing the spent fuel in accordance with NRC regulations in anticipation that a final storage site for all such waste will be developed and put in operation by the U.S. government.
TVA's nuclear operations produce various types of nuclear waste materials, including spent fuel. TVA has been storing the spent fuel in accordance with NRC regulations in anticipation that a final storage site for all such waste will be developed and put in operation by the U.S. government.
Complying with these or additional requirements set forth by NERC may require significant capital expenditures and may negatively affect TVA's cash flows, results of operations, and financial condition. TVA could become subject to other federal legislation aimed specifically at curtailing TVA’s activities.
If TVA fails to comply with the mandatory reliability standards, TVA could be subject to increased compliance obligations. Complying with these or additional requirements set forth by NERC may require significant capital expenditures and may negatively affect TVA's cash flows, results of operations, and financial condition. TVA could become subject to other federal legislation aimed specifically at curtailing TVA’s activities.
These attacks may have been carried out, or in the future could be carried out, by individuals, groups, or nation states. Although TVA employs extensive cyber safeguards and works with industry specialists and relevant governmental authorities to deter, stop, or mitigate cyber attacks, it is possible that these measures might not prevent all attacks.
These attacks may have been carried out, or in the future could be carried out, by individuals, groups, or nation states. TVA employs extensive cyber safeguards and works with industry specialists and relevant governmental authorities to deter, stop, or mitigate cyber attacks.
The design of any system of financial controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
The design of any system of financial controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. TVA may be unable to use regulatory accounting for some or all costs.
The importance of having access to the debt markets is enhanced by the fact that TVA, unlike most utilities, relies almost entirely on debt capital, since as a governmental instrumentality, TVA cannot issue equity securities.
It is critical that TVA continue to have access to the debt markets in order to meet its cash requirements. The importance of having access to the debt markets is enhanced by the fact that TVA, unlike most utilities, relies almost entirely on debt capital, since as a governmental instrumentality, TVA cannot issue equity securities.
See Item 1, Business — Environmental Matters — Water Quality Control Developments for a discussion of the EPA's new effluent limitation guidelines, Item 1, Business — Environmental Matters — Cleanup of Solid and Hazardous Wastes — Coal Combustion Residuals for a discussion of recent revisions to the EPA's CCR rule, and Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive orders regarding climate change.
See Item 1, Business — Environmental Matters — Clean Air Act Programs and Regulations for a discussion of the EPA's proposed greenhouse gas emission standards and guidelines, Item 1, Business — Environmental Matters — Water Quality Control Developments for a discussion of the EPA's proposed effluent limitation guidelines, Item 1, Business — Environmental Matters — Cleanup of Solid and Hazardous Wastes — Coal Combustion Residuals for a discussion of proposed revisions to the EPA's CCR Rule, and Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive actions regarding climate change.
If TVA were to have insufficient water supply of the quality necessary to meet the needs of its plants, TVA may be required to reduce generation at its affected facilities to levels compatible with the available supply of quality water, or take additional steps that change how TVA conducts its operations or that otherwise cause TVA to incur additional expense. 52 Table of Contents Catastrophic events may negatively affect TVA's cash flows, results of operations, and financial condition.
If TVA were to have insufficient water supply of the quality necessary to meet the needs of its plants, TVA may be required to reduce generation at its affected facilities to levels compatible with the available supply of quality water, or take additional steps that change how TVA conducts its operations or that otherwise cause TVA to incur additional expense.
In addition, approaching or reaching the debt ceiling may lead to increased legislative or regulatory oversight of TVA's activities and could lead to negative rating actions by credit rating agencies. TVA, together with owners of TVA securities, may be impacted by downgrades of TVA's credit ratings.
In addition, approaching or reaching the debt ceiling may lead to increased legislative or regulatory oversight of TVA's activities and could lead to negative rating actions by credit rating agencies.
On September 30, 2022, TVA had $19.3 billion of Bonds outstanding (not including non-cash items of foreign currency exchange gain of $150 million, unamortized debt issue costs of $42 million, and net discount on sale of Bonds of $82 million).
On September 30, 2023, TVA had $19.5 billion of Bonds outstanding (not including non-cash items of foreign currency exchange gain of $109 million, unamortized debt issue costs of $41 million, and net discount on sale of Bonds of $85 million).
Additionally, some studies have predicted that climate change may cause catastrophic events, such as droughts and floods, to occur more frequently or with greater intensity in the Tennessee Valley region, which could adversely impact TVA. ACCOUNTING AND FINANCIAL REPORTING RISKS TVA may be unable to use regulatory accounting for some or all costs.
Additionally, some studies have predicted that climate change may cause catastrophic events, such as heat waves, droughts, and floods, to occur more frequently or with greater intensity in the Tennessee Valley region, which could adversely impact TVA.
TVA's use of fossil fuels, among other things, could lead such investors or underwriters to not purchase TVA Bonds or reduce the attractiveness of TVA Bonds as compared to other investments, thereby limiting the market for TVA Bonds. In addition, legal limitations may affect the ability of banks and others to invest in Bonds.
TVA's use of fossil fuels, among other things, could lead such investors or underwriters to not purchase TVA Bonds or reduce the attractiveness of TVA Bonds as compared to other investments, thereby limiting the market for TVA Bonds.
These attacks could pose health and safety risks, significantly disable or destroy TVA assets, interfere with TVA's operations, result in additional regulatory or security requirements, and otherwise negatively affect TVA's cash flows, results of operations, and financial condition. TVA's assets or their supporting infrastructure may not operate as planned.
These attacks could pose health and safety risks, significantly disable or destroy TVA assets, interfere with TVA's operations, result in additional regulatory or security requirements, increase the costs of nuclear licensing or compliance, and otherwise negatively affect TVA's cash flows, results of operations, and financial condition.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee also Item 1A, Risk Factors — Operational Risks and Risks Related to the Environment and Catastrophic Events. 55 Table of Contents The following table summarizes TVA's summer net capability in MW at September 30, 2022: SUMMER NET CAPABILITY At September 30, 2022 Source of Capability Location Number of Units Summer Net Capability (MW) Date First Unit Placed in Service (CY) Date Last Unit Placed in Service (CY) TVA-Operated Generating Facilities Nuclear Browns Ferry Alabama 3 3,662 1974 1977 Sequoyah Tennessee 2 2,292 1981 1982 Watts Bar Tennessee 2 2,278 1996 2016 Total Nuclear 7 8,232 Coal-Fired Bull Run Tennessee 1 765 1967 1967 Cumberland Tennessee 2 2,470 1973 1973 Gallatin Tennessee 4 976 1956 1959 Kingston Tennessee 9 1,298 1954 1955 Shawnee Kentucky 9 1,071 1953 1955 Total Coal-Fired 25 6,580 Natural Gas and/or Oil-Fired (1)(2) Simple-Cycle Combustion Turbine Allen (3) Tennessee 20 287 1971 1972 Brownsville Tennessee 4 438 1999 1999 Colbert Alabama 8 360 1972 1972 Gallatin Tennessee 8 580 1975 2000 Gleason Tennessee 3 455 2000 2000 Johnsonville Tennessee 19 1,028 1975 2000 Kemper Mississippi 4 292 2002 2002 Lagoon Creek Tennessee 12 884 2001 2002 Marshall County Kentucky 8 592 2002 2002 Subtotal Simple-Cycle Combustion Turbine 86 4,916 Combined-Cycle Combustion Turbine Ackerman (4) Mississippi 1 713 2007 2007 Allen (5) Tennessee 1 1,106 2018 2018 Caledonia (6) Mississippi 3 765 2003 2003 John Sevier (7) Tennessee 1 871 2012 2012 Lagoon Creek (8) Tennessee 1 525 2010 2010 Magnolia Mississippi 3 918 2003 2003 Paradise (9) Kentucky 1 1,100 2017 2017 Southaven Mississippi 3 780 2003 2003 Subtotal Combined-Cycle Combustion Turbine 14 6,778 Co-Generation Johnsonville Tennessee 1 83 1975 2000 Total Natural Gas and/or Oil-Fired 101 11,777 Hydroelectric Conventional Plants Alabama 36 1,176 1925 1962 Georgia 2 35 1931 1956 Kentucky 5 223 1944 1948 North Carolina 6 492 1940 1956 Tennessee (3)(10) 60 1,828 1912 1972 Pumped-Storage (11) Tennessee 4 1,654 1978 1979 Total Hydroelectric 113 5,408 Diesel Generator Meridian Mississippi 5 9 1998 1998 TVA Non-hydro Renewable Resources (12) 1 TVA Other Nonrenewable Resources (12) 5 Total TVA-Operated Generating Facilities 32,012 Contract Renewable Resources (13) 324 Power Purchase and Other Agreements - Renewable (14) 2,157 Power Purchase and Other Agreements - Nonrenewable (14) 3,618 Total Summer Net Capability 38,111 56 Table of Contents Notes (1) See Generating Properties above for a discussion of TVA-operated natural gas and/or oil-fired facilities subject to leaseback and long-term lease arrangements.
Biggest changeSee Item 1, Business — Power Supply and Load Management Resources — Power Purchase and Other Agreements for information on TVA's renewable and nonrenewable power purchase contracts by resource type and location. 58 Table of Contents The following table summarizes TVA's summer net capability in MW at September 30, 2023: SUMMER NET CAPABILITY At September 30, 2023 Source of Capability Location Number of Units Summer Net Capability (MW) Date First Unit Placed in Service (CY) Date Last Unit Placed in Service (CY) TVA-Operated Generating Facilities Nuclear Browns Ferry Alabama 3 3,662 1974 1977 Sequoyah Tennessee 2 2,292 1981 1982 Watts Bar Tennessee 2 2,278 1996 2016 Total Nuclear 7 8,232 Coal-Fired Cumberland Tennessee 2 2,470 1973 1973 Gallatin Tennessee 4 976 1956 1959 Kingston Tennessee 9 1,298 1954 1955 Shawnee Kentucky 9 1,071 1953 1955 Total Coal-Fired 24 5,815 Natural Gas and/or Oil-Fired (1)(2) Simple-Cycle Combustion Turbine Allen (3) Tennessee 20 287 1971 1972 Brownsville Tennessee 4 438 1999 1999 Colbert Alabama 11 1,041 1972 2023 Gallatin Tennessee 8 580 1975 2000 Gleason Tennessee 3 455 2000 2000 Johnsonville Tennessee 19 1,028 1975 2000 Kemper Mississippi 4 292 2002 2002 Lagoon Creek Tennessee 12 884 2001 2002 Marshall County Kentucky 8 592 2002 2002 Subtotal Simple-Cycle Combustion Turbine 89 5,597 Combined-Cycle Combustion Turbine Ackerman (4) Mississippi 1 713 2007 2007 Allen (5) Tennessee 1 1,106 2018 2018 Caledonia (6) Mississippi 3 819 2003 2003 John Sevier (7) Tennessee 1 871 2012 2012 Lagoon Creek (8) Tennessee 1 596 2010 2010 Magnolia Mississippi 3 951 2003 2003 Paradise (9) Kentucky 1 1,100 2017 2017 Southaven Mississippi 3 802 2003 2003 Subtotal Combined-Cycle Combustion Turbine 14 6,958 Co-Generation Johnsonville Tennessee 1 83 1975 2000 Total Natural Gas and/or Oil-Fired 104 12,638 Hydroelectric Conventional Plants Alabama 36 1,159 1925 1962 Georgia 2 37 1931 1956 Kentucky 5 225 1944 1948 North Carolina 6 473 1940 1956 Tennessee (3)(10) 60 1,845 1912 1972 Pumped-Storage (11) Tennessee 4 1,700 1978 1979 Total Hydroelectric 113 5,439 Diesel Generator Meridian Mississippi 5 9 1998 1998 TVA Non-hydro Renewable Resources (12) 1 TVA Other Nonrenewable Resources (12) 5 Total TVA-Operated Generating Facilities Summer Net Capability 32,139 Notes (1) See Generating Properties above for a discussion of TVA-operated natural gas and/or oil-fired facilities subject to leaseback and long-term lease arrangements.
Additionally, TVA manages over 150 agreements for commercial recreation (such as campgrounds and marinas). As part of its stewardship responsibilities, TVA approval is required to be obtained before any obstruction affecting navigation, flood control, or public lands can be constructed in or along the Tennessee River and its tributaries.
Additionally, TVA manages over 150 agreements for commercial recreation (such as campgrounds and marinas). As part of its stewardship responsibilities, TVA approval is required to be obtained before any obstruction affecting navigation, flood control, or public lands can be constructed across, along, or in the Tennessee River and its tributaries.
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") prohibits TVA (1) from mortgaging any part of its power properties and (2) from disposing of all or any substantial portion of these properties unless TVA provides for a continuance of the interest, principal, and sinking fund payments due and to become due on all outstanding Bonds, or for the retirement of such Bonds. 57 Table of Contents
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") prohibits TVA (1) from mortgaging any part of its power properties and (2) from disposing of all or any substantial portion of these properties unless TVA provides for a continuance of the interest, principal, and sinking fund payments due and to become due on all outstanding Bonds, or for the retirement of such Bonds. 60 Table of Contents
(9) Paradise Combined Cycle Facility is a single steam cycle unit driven by three gas turbines (3x1 configuration). (10) Includes 86 MW of summer net capability associated with Hiwassee Hydro Unit 2. See Item 1, Business — Power Supply and Load Management Resources — Conventional Hydroelectric Dam s.
(9) Paradise Combined Cycle Facility is a single steam cycle unit driven by three gas turbines (3x1 configuration). (10) Includes 86 MW of summer net capability associated with Hiwassee Hydro Unit 2. See Item 1, Business — Power Supply and Load Management Resources — Renewable Energy Resources — Conventional Hydroelectric Dam s.
(3) As of September 30, 2022, TVA had five idled units at Allen Combustion Turbine Facility: Units 2, 3, 11, 17, and 18 and three units that were in long-term outage and unavailable for service at Wilbur Hydroelectric Facility: Units 1-3.
(3) As of September 30, 2023, TVA had five idled units at Allen Combustion Turbine Facility (Units 2, 3, 11, 17, and 18) and three units that were in long-term outage and unavailable for service at Wilbur Hydroelectric Facility (Units 1-3).
These units are included in their respective locations in the table above; however, the capability from these units is excluded. (4) Ackerman Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration). (5) Allen Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration).
These units are included in their respective locations in the table above; however, the capability from these units is excluded. (4) Ackerman Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration). 59 Table of Contents (5) Allen Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration).
(2) As of September 30, 2022, 326 MW of peak firing short-term capability of simple-cycle combustion turbine units was not operational and would require additional investment for dependable use; therefore, this short-term capability is not presented in the table above.
(2) As of September 30, 2023, 137 MW of peak firing short-term capability of simple-cycle combustion turbine units was not operational and would require additional investment for dependable use; therefore, this short-term capability is not presented in the table above.
It does not include real-time bulk electrical system operating constraints such as transmission line loading limitations, fuel availability such as coal, gas, and seasonal river reservoir levels, fuel blend, severe weather events, intermittency of renewable resources associated with weather and other factors, environmental and/or other regulatory constraints, transmission system outages, generator outages, or generator derates.
It does not include real-time bulk electrical system operating constraints such as transmission line loading limitations, fuel availability such as coal, gas, and seasonal river reservoir levels, fuel blend, severe weather events, environmental and/or other regulatory constraints, transmission system outages, generator outages, or generator derates.
(11) See Item 1, Business — Power Supply and Load Management Resources — Raccoon Mountain Pumped-Storage Plant for a discussion of Raccoon Mountain Pumped-Storage Plant. (12) TVA owns approximately one MW of renewable solar capability among 13 solar installations and Allen Combined Cycle Facility has five MW of nonrenewable biomass capability that came online in 2022.
(11) See Item 1, Business — Power Supply and Load Management Resources — Hydroelectric Pumped-Storage for a discussion of Raccoon Mountain Pumped-Storage Plant. (12) TVA owns approximately one MW of renewable solar capability among nine operating solar installations, and Allen Combined Cycle Facility has five MW of nonrenewable biomass capability.
Generating Properties At September 30, 2022, TVA-operated generating assets consisted of seven nuclear units, 25 active coal-fired units, 86 simple-cycle units (81 active units and five idled units), one cogeneration unit, 14 combined-cycle power blocks, 109 conventional hydroelectric units (106 active units and three units in long-term outage and unavailable for service), four pumped-storage hydroelectric units, five diesel generator units, and 13 solar installations.
Generating Properties At September 30, 2023, TVA-operated generating assets consisted of seven nuclear units, 24 active coal-fired units, 89 simple-cycle units (84 active units and five idled units), one cogeneration unit, 14 combined-cycle power blocks, 109 conventional hydroelectric units (106 active units and three units in long-term outage and unavailable for service), four pumped-storage hydroelectric units, five diesel generator units, and nine operating solar installations.
Transmission Properties TVA's transmission system interconnects with systems of surrounding utilities and, at September 30, 2022, consisted primarily of approximately 2,500 circuit miles of 500 kilovolt, 11,900 circuit miles of 161 kilovolt, and 2,000 circuit miles of other voltage transmission lines; 4,412 miles of fiber optic lines; 534 transmission substations, power switchyards, and switching stations; and 1,341 customer connection points (customer, generation, and interconnection).
Transmission Properties TVA's transmission system interconnects with systems of surrounding utilities and, at September 30, 2023, consisted primarily of approximately 2,500 circuit miles of 500 kilovolt, 11,900 circuit miles of 161 kilovolt, and 1,900 circuit miles of other voltage transmission lines; 5,113 miles of fiber optic lines; 573 transmission substations, power switchyards, and switching stations; and 1,355 customer connection points (customer, generation, and interconnection).
These public lands and waters managed by TVA provide both conservation and responsible recreation. Buildings TVA has a variety of buildings and structures located throughout its service area including generation and transmission facilities, corporate offices, customer service centers, power service centers, warehouses, visitor centers, and crew quarters.
These public lands and waters managed by TVA provide both conservation and sustainable recreation. Buildings TVA has buildings and structures located throughout its service area to support TVA's mission of service. These buildings and structures include generation and transmission facilities, corporate offices, customer service centers, power service centers, warehouses, visitor centers, and crew quarters.
As of September 30, 2022, eight of the simple-cycle CTs and four of the combined-cycle power blocks were leased to special purpose entities ("SPEs") and leased back to TVA under long-term leases. See Note 11 — Variable Interest Entities and Note 14 — Debt and Other Obligations — Lease/Leasebacks .
As of September 30, 2023, four of the combined-cycle power blocks were leased to special purpose entities ("SPEs") and leased back to TVA under long-term leases. See Note 11 — Variable Interest Entities and Note 14 — Debt and Other Obligations — Lease/Leasebacks . In addition, TVA is leasing the three Caledonia combined-cycle power blocks under a long-term lease.
Summer net capability as presented in the table below reflects the expected output of individual resources at TVA’s anticipated summer demand peak. The summation of those individual resources does not include the real-time bulk electrical system operating constraints previously noted.
Summer net capability as presented in the table below reflects the expected output of individual resources at TVA’s anticipated summer demand peak. The summation of those individual resources does not include the real-time bulk electrical system operating constraints previously noted. See also Item 1A, Risk Factors — Operational Risks and Risks Related to the Environment and Catastrophic Events.
Net Capability Net capability is defined as the ability of an electric system, generating unit, or other system component to carry or generate power for a specified time period.
For a discussion of these assets, see Item 1, Business — Power Supply and Load Management Resources . Net Capability Net capability is defined as the ability of an electric system, generating unit, or other system component to carry or generate power for a specified time period.
Two significant buildings are its Knoxville Office Complex and the Chattanooga Office Complex ("COC") in Tennessee. TVA continues to study its real property portfolio as part of the Strategic Real Estate Plan, which is aimed at reducing cost, right-sizing the portfolio, and aligning real estate holdings with TVA's strategic direction.
Two significant buildings are its Knoxville Office Complex and the Chattanooga Office Complex ("COC") in Tennessee. TVA engages in ongoing Tennessee Valley-wide real property portfolio evaluations of buildings, structures, and land as part of the strategic real estate program, which focuses on reducing cost, right-sizing the portfolio, and aligning real estate holdings with TVA's strategic direction.
In addition, as a result of the COVID-19 pandemic, TVA continues to assess a hybrid work environment for those who do not have to be physically present at TVA offices. TVA is also assessing and reviewing the pandemic's long-term impacts to the real property portfolio, including the COC.
In addition, TVA continues to operate in a hybrid work environment for those who do not have to be physically present at a TVA facility. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Real Property Portfolio .
Removed
In addition, TVA is leasing the three Caledonia combined-cycle power blocks under a long-term lease. For a discussion of these assets, see Item 1, Business — Power Supply and Load Management Resources .
Added
In addition to the TVA-operated generating facilities presented in the table below, TVA also has 8,471 MWs of operating capacity available through PPAs. At September 30, 2023, these contracts were comprised of 3,061 MWs of renewable PPAs and 5,410 MWs of nonrenewable PPAs.
Removed
(13) Contract Renewable Resources is capability from various historical renewable energy programs that consist of PPAs primarily with individuals and small businesses. (14) See Item 1, Business — Power Supply and Load Management Resources — Power Purchase and Other Agreements for information on renewable and non-renewable energy power purchase contracts.
Added
The summation of TVA's PPAs under contract does not include real-time operating constraints, such as intermittency of renewable resources associated with weather or other factors.
Removed
TVA sells the RECs resulting from some of this purchased power to certain customers. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Optimum Energy Portfolio — Renewable Power Purchase Agreements .

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor a discussion of Legal Proceedings involving TVA, see Note 21 — Commitments and Contingencies — Legal Proceedings, which discussion is incorporated by reference into this Item 3. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 58 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Not applicable.
Biggest changeFor a discussion of Legal Proceedings involving TVA, see Note 22 — Commitments and Contingencies — Legal Proceedings, which discussion is incorporated by reference into this Item 3. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 61 Table of Contents PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Not applicable.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................................................... 59 Business and Mission......................................................................................................................................................................................................................... 59 Executive Overview............................................................................................................................................................................................................................ 62 Results of Operations......................................................................................................................................................................................................................... 63 Liquidity and Capital Resources......................................................................................................................................................................................................... 69 Off-Balance Sheet Arrangements....................................................................................................................................................................................................... 73 Key Initiatives and Challenges........................................................................................................................................................................................................... 73 Critical Accounting Estimates......................................................................................................................................................................................... 81 New Accounting Standards and Interpretations................................................................................................................................................................................. 86 Legislative and Regulatory Matters.................................................................................................................................................................................................... 86 Environmental Matters....................................................................................................................................................................................................................... 87 Legal Proceedings.............................................................................................................................................................................................................................. 87 Risk Management Activities............................................................................................................................................................................................................... 87 ITEM 7A.
Biggest changeMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................................................... 62 Business and Mission......................................................................................................................................................................................................................... 62 Executive Overview............................................................................................................................................................................................................................ 65 Results of Operations......................................................................................................................................................................................................................... 66 Liquidity and Capital Resources......................................................................................................................................................................................................... 71 Key Initiatives and Challenges........................................................................................................................................................................................................... 76 Critical Accounting Estimates.............................................................................................................................................................................................................. 84 New Accounting Standards and Interpretations................................................................................................................................................................................. 90 Legislative and Regulatory Matters.................................................................................................................................................................................................... 90 Environmental Matters....................................................................................................................................................................................................................... 90 Legal Proceedings.............................................................................................................................................................................................................................. 90 Risk Management Activities............................................................................................................................................................................................................... 90 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................................................................................................... 89 ITEM 8.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................................................................................................... 93 ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................................................................................................................................... 90 Consolidated Balance Sheets............................................................................................................................................................................................................ 90 Consolidated Statements of Operations............................................................................................................................................................................................. 92 Consolidated Statements of Comprehensive Income (Loss)............................................................................................................................................................. 93 Consolidated Statements of Cash Flows........................................................................................................................................................................................... 94 Consolidated Statements of Changes in Proprietary Capital............................................................................................................................................................. 95 Notes to Consolidated Financial Statements..................................................................................................................................................................................... 96 Report of Independent Registered Public Accounting Firm (PCAOB ID 42) ...................................................................................................................................... 154 2 Table of Contents
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................................................................................................................................... 94 Consolidated Balance Sheets............................................................................................................................................................................................................ 94 Consolidated Statements of Operations............................................................................................................................................................................................. 96 Consolidated Statements of Comprehensive Income (Loss)............................................................................................................................................................. 97 Consolidated Statements of Cash Flows........................................................................................................................................................................................... 98 Consolidated Statements of Changes in Proprietary Capital............................................................................................................................................................. 99 Notes to Consolidated Financial Statements..................................................................................................................................................................................... 100 Report of Independent Registered Public Accounting Firm (PCAOB ID 42) ...................................................................................................................................... 156 2 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

231 edited+111 added−94 removed123 unchanged
Biggest changeSee Item 1, Business — Rates — Rate Methodology . 65 Table of Contents The changes in revenue components are summarized below: Changes in Revenue Components For the years ended September 30 (in millions) 2022 2021 Change Base revenue Energy revenue $ 4,885 $ 4,719 $ 166 Demand revenue 3,610 3,478 132 Grid access charge 590 596 (6) Long-term partnership credits for LPCs (199) (189) (10) Pandemic relief credits (228) (221) (7) Other charges and credits (1) (673) (631) (42) Total base revenue 7,985 7,752 233 Fuel cost recovery 4,379 2,601 1,778 Off-system sales 7 4 3 Revenue from sales of electricity 12,371 10,357 2,014 Other revenue 169 146 23 Total operating revenues $ 12,540 $ 10,503 $ 2,037 Note (1) Includes economic development credits to promote growth in the Tennessee Valley, hydro preference credits for residential customers of LPCs, and demand response credits allowing TVA to reduce industrial customer usage in periods of peak demand to balance system demand.
Biggest changeThe changes in revenue components are summarized below: Changes in Revenue Components For the years ended September 30 (in millions) 2023 2022 (1) Change Percent Change Base revenue Energy revenue $ 4,687 $ 4,873 $ (186) (3.8) % Demand revenue 3,654 3,610 44 1.2 % Grid access charge 589 590 (1) (0.2) % Long-term partnership credits for LPCs (199) (199) — — % Pandemic relief credits (225) (228) 3 (1.3) % Other charges and credits (2) (643) (673) 30 (4.5) % Total base revenue 7,863 7,973 (110) (1.4) % Fuel cost recovery 4,025 4,379 (354) (8.1) % Off-system sales 14 19 (5) (26.3) % Pre-commercial operations (3) (3) — (3) 100.0 % Revenue from sales of electricity 11,899 12,371 (472) (3.8) % Other revenue 155 169 (14) (8.3) % Total operating revenues $ 12,054 $ 12,540 $ (486) (3.9) % Notes (1) For the year ended September 30, 2022, $12 million previously classified as Energy revenue was reclassified to Off-system sales to conform with current year presentation.
During 2019, the TVA Board approved the opportunity for TVA to explore being directly involved in the development of a utility-scale solar project, contingent on the successful completion of environmental reviews under the NEPA and other applicable laws. In 2021, TVA purchased land for this development. In 2022, environmental reviews were complete.
During 2019, the TVA Board approved the opportunity for TVA to explore being directly involved in the development of a utility-scale solar project, contingent on the successful completion of environmental reviews under the NEPA and other applicable laws. In 2021, TVA purchased land for this development and in 2022, environmental reviews were complete.
TVA's Police and Emergency Management personnel are active participants with numerous professional and peer physical security organizations in both the electric industry and law enforcement communities. TVA works with the North American Electric Reliability Corporation ("NERC"), the SERC Reliability Corporation, the North American Transmission Forum, and other utilities to implement industry approved recommendations and standards. Nuclear Security .
TVA's Police and Emergency Management personnel are active participants with numerous professional and peer physical security organizations in both the electric industry and law enforcement communities. TVA works with NERC, the SERC Reliability Corporation, the North American Transmission Forum, and other utilities to implement industry approved recommendations and standards. Nuclear Security .
Discount Rate – TVA uses its incremental borrowing rate over a period consistent with the remaining timeframe until the costs are expected to be incurred to calculate the present value of the weighted estimated cash flows required to satisfy TVA's decommissioning obligations.
Discount Rate – TVA uses its incremental borrowing rate over a period consistent with the remaining timeframe until the costs are expected to be incurred to calculate the present value of the weighted estimated cash flows required to satisfy TVA's decommissioning obligations.
At September 30, 2022, TVA's short-term borrowings were $1.2 billion, and the current maturities of long-term debt were $68 million. Based on TVA's interest rate exposure at September 30, 2022, an immediate one percentage point increase in interest rates would have resulted in an increase of $12 million in TVA's short-term interest expense.
At September 30, 2022, TVA's short-term borrowings were $1.2 billion, and the current maturities of long-term debt were $68 million. Based on TVA's interest rate exposure at September 30, 2022, an immediate one percentage point increase in interest rates would have resulted in an increase of $12 million in TVA's short-term interest expense. Long-Term Debt.
The assets in the NDT, ART, SERP, and DCP are generally measured at fair value based on quoted market prices or other observable market data such as interest rate indices. These investments are primarily U.S. and international equities, real estate investment trusts, fixed income investments, high-yield fixed income investments, U.S.
The assets in the NDT, ART, SERP, DCP, and RP are generally measured at fair value based on quoted market prices or other observable market data such as interest rate indices. These investments are primarily U.S. and international equities, real estate investment trusts, fixed income investments, high-yield fixed income investments, U.S.
In addition to cash from operations and proceeds from the issuance of short-term and long-term debt, TVA's sources of liquidity include four long-term revolving credit facilities totaling approximately $2.7 billion, a $150 million credit facility with the United States Department of the Treasury ("U.S. Treasury"), and proceeds from other financings.
In addition to cash from operations and proceeds from the issuance of short-term and long-term debt, TVA's sources of liquidity include four long-term revolving credit facilities totaling $2.7 billion, a $150 million credit facility with the United States Department of the Treasury ("U.S. Treasury"), and proceeds from other financings.
The MD&A includes the following sections: • Business and Mission — a general description of TVA's business, objectives, strategic priorities, and core capabilities; • Executive Overview — a general overview of TVA's activities and results of operations for 2022; • Results of Operations — an analysis of TVA's consolidated results of operations for 2021 and 2022; • Liquidity and Capital Resources — an analysis of cash flows, a description of aggregate contractual obligations, and an overview of financial position; • Key Initiatives and Challenges — an overview of current and future initiatives and challenges facing TVA; • Critical Accounting Estimates — a summary of significant estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes; • Legislative and Regulatory Matters — a summary of laws and regulations that may impact TVA; and • Risk Management Activities — a description of TVA's risk governance and exposure to various market risks.
The MD&A includes the following sections: • Business and Mission — a general description of TVA's business, objectives, strategic priorities, and core capabilities; • Executive Overview — a general overview of TVA's activities and results of operations for 2023; • Results of Operations — an analysis of TVA's consolidated results of operations for 2022 and 2023; • Liquidity and Capital Resources — an analysis of cash flows, a description of aggregate contractual obligations, and an overview of financial position; • Key Initiatives and Challenges — an overview of current and future initiatives and challenges facing TVA; • Critical Accounting Estimates — a summary of significant estimates, judgments, and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes; • Legislative and Regulatory Matters — a summary of laws and regulations that may impact TVA; and • Risk Management Activities — a description of TVA's risk governance and exposure to various market risks.
TVA continues to evaluate and respond to the EO, associated Office of Management and Budget memorandums, and other emerging requirements in alignment with the order. TVA has submitted all reports as required, established response teams and an oversight structure, and initiated projects as necessary to address the required actions.
TVA continues to respond to the EO, associated Office of Management and Budget memorandums, and other emerging requirements in alignment with the order. TVA has submitted all reports as required, established response teams and an oversight structure, and initiated projects as necessary to address the required actions.
TVA will procure the renewable energy and sell the resulting Renewable Energy Certificates ("RECs") to specific customers, allowing TVA to increase its renewable energy portfolio without additional costs to other TVA customers. These agreements help to align the core values of TVA and the public power model with the desire of TVA's customers for renewable energy.
TVA will procure the renewable energy and sell the resulting RECs to specific customers, allowing TVA to increase its renewable energy portfolio without additional costs to other TVA customers. These agreements help to align the core values of TVA and the public power model with the desire of TVA's customers for renewable energy.
According to statements made by nationally recognized credit rating agencies, downward pressure on the ratings of the U.S. could eventually develop if there are no changes in current policies and budget deficits and the trajectory of debt continues to increase; additionally, current ratings factor in the prospect that debates over raising the debt ceiling of the U.S. government could continue to be protracted and difficult.
According to statements made by nationally recognized credit rating agencies, downward pressure on the ratings of the U.S. could eventually develop if there are no changes in current policies and budget deficits and the trajectory of debt continues to increase; additionally, current ratings factor in the prospect that debates over raising the debt limit of the U.S. government could continue to be protracted and difficult.
TVA's mission focuses on three key areas: ENERGY ENVIRONMENT ECONOMIC DEVELOPMENT • Energy — Delivering reliable, low cost, clean energy; • Environment — Caring for the region's natural resources; and • Economic Development — Creating sustainable economic growth. 60 Table of Contents While TVA's mission has not changed since it was established in 1933, the climate in which TVA operates continues to evolve.
TVA's mission focuses on three key areas: ENERGY ENVIRONMENT ECONOMIC DEVELOPMENT • Energy — Delivering reliable, low cost, clean energy; • Environment — Caring for the region's natural resources; and • Economic Development — Creating sustainable economic growth. 63 Table of Contents While TVA's mission has not changed since it was established in 1933, the climate in which TVA operates continues to evolve.
On November 29, 2021, after obtaining the necessary approvals from TDEC, TVA began removing CCR materials to an offsite, lined landfill, and removal activities are expected to continue through 2029. Potential Liability Associated with Workers' Exposure to CCR Materials. In response to the 2008 ash spill at Kingston, TVA hired Jacobs Engineering Group, Inc.
On November 29, 2021, after obtaining the necessary approvals from TDEC, TVA began removing CCR materials to an offsite, lined landfill, and removal activities are expected to continue through 2030. Potential Liability Associated with Workers' Exposure to CCR Materials. In response to the 2008 ash spill at Kingston, TVA hired Jacobs Engineering Group, Inc.
The plan assists in the recruitment of top executive talent for TVA. As in other corporations, deferred compensation can be an integral part of a total compensation package. Assets currently include deferral balances. The default return on investment of the accounts is interest calculated based on the composite rate of all marketable U.S. Treasury issues.
The plan assists in the recruitment of top executive talent for TVA. As in other corporations, deferred compensation can be an integral part of a total compensation package. Assets currently include deferral balances. The default return on investment of the accounts is interest calculated based on the composite rate of all marketable U.S.
TVA discounts each financial instrument using the historical default rate (as reported by Moody's for CY 1983 to CY 2021) for companies with a similar credit rating over a time period consistent with the remaining term of the contract. All derivative instruments are analyzed individually and are subject to unique risk exposures.
TVA discounts each financial instrument using the historical default rate (as reported by Moody's for CY 1983 to CY 2022) for companies with a similar credit rating over a time period consistent with the remaining term of the contract. All derivative instruments are analyzed individually and are subject to unique risk exposures.
At September 30, 2022 and 2021, the interest rates on all of TVA's outstanding long-term debt were fixed (or subject only to downward adjustment under certain conditions). Accordingly, an immediate one percentage point increase in interest rates would not have affected TVA's interest expense associated with its long-term debt.
At September 30, 2023 and 2022, the interest rates on all of TVA's outstanding long-term debt were fixed (or subject only to downward adjustment under certain conditions). Accordingly, an immediate one percentage point increase in interest rates would not have affected TVA's interest expense associated with its long-term debt.
TVA operates in a highly regulated environment with respect to cybersecurity. TVA's cybersecurity program aligns or complies with the Federal Information Security Management Act, the NERC Critical Infrastructure Protection requirements, and the NRC requirements for cybersecurity, as well as industry best practices. As part of the U.S. government, TVA coordinates with and works closely with the U.S.
TVA operates in a highly regulated environment with respect to cybersecurity. TVA's cybersecurity program aligns or complies with the Federal Information Security Modernization Act, the NERC Critical Infrastructure Protection requirements, and the NRC requirements for cybersecurity, as well as industry best practices. As part of the U.S. government, TVA coordinates with and works closely with the U.S.
Changes in assumptions and estimates included within the calculations of the value of the AROs could result in different results than those identified and recorded in the financial statements, including amortization of the regulatory assets. Nuclear Decommissioning . Decommissioning cost studies are updated for each of TVA's nuclear units long-lived assets at least every five years.
Changes in assumptions and estimates included within the calculations of the value of the AROs could result in different results than those identified and recorded in the financial statements, including amortization of the regulatory assets. Nuclear Decommissioning . Decommissioning cost studies are updated for each of TVA's nuclear unit's long-lived assets at least every five years.
The MD&A is provided as a supplement to, and should be read in conjunction with, TVA's consolidated financial statements and the accompanying notes thereto contained in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K for the fiscal year ended September 30, 2022 (the "Annual Report").
The MD&A is provided as a supplement to, and should be read in conjunction with, TVA's consolidated financial statements and the accompanying notes thereto contained in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the "Annual Report").
Coal Combustion Residuals Coal Combustion Residuals Facilities . TVA has committed to a programmatic approach for the elimination of wet storage of coal combustion residuals ("CCR") within the TVA service area.
TVA has committed to a programmatic approach for the elimination of wet storage of coal combustion residuals ("CCR") within the TVA service area.
In setting rates, however, 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 be sold at rates as low as feasible. 59 Table of Contents • TVA is not authorized to raise capital by issuing equity securities.
In setting rates, however, 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 be sold at rates as low as feasible. 62 Table of Contents • TVA is not authorized to raise capital by issuing equity securities.
For a discussion of certain current material Legal Proceedings, see Note 21 — Commitments and Contingencies — Legal Proceedings , which discussions are incorporated into this Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations . Risk Management Activities TVA is exposed to various market risks.
For a discussion of certain current material Legal Proceedings, see Note 22 — Commitments and Contingencies — Legal Proceedings , which discussions are incorporated into this Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations . Risk Management Activities TVA is exposed to various market risks.
At September 30, 2022 and 2021, an immediate 10 percent decrease in the value of the SERP investments would have reduced the value of the investments by $7 million and $8 million, respectively. Deferred Compensation Plan. The DCP is designed to provide participants with the ability to defer compensation to future periods.
At September 30, 2023 and 2022, an immediate 10 percent decrease in the value of the SERP investments would have reduced the value of the investments by $8 million and $7 million, respectively. Deferred Compensation Plan. The DCP is designed to provide participants with the ability to defer compensation to future periods.
Related to its carbon reduction efforts, TVA has established six guiding principles which are as follows: • Prioritize the needs of Tennessee Valley stakeholders as TVA works to achieve its goals by maintaining low rates and high reliability, and attracting new jobs in the Tennessee Valley. • Use best-available science and support research and policies that further carbon-free dispatchable technologies. • Partner with long-term LPCs and other customers and communities to support economy-wide decarbonization efforts and the strategic electrification of other sectors, such as transportation. • Maintain nuclear generation, hydro generation, and a strong transmission grid as key enabling assets. • Be transparent with stakeholders in measuring and sharing TVA's progress, and listen and work effectively with all its stakeholders to understand their priorities and needs. 77 Table of Contents • Adapt to new technologies and changing policies, and be willing and open to changing TVA's plans and projects to achieve deep carbon reduction.
Related to its carbon reduction efforts, TVA has established six guiding principles which are as follows: • Prioritize the needs of Tennessee Valley stakeholders as TVA works to achieve its goals by maintaining low rates and high reliability, and attracting new jobs in the Tennessee Valley. • Use best-available science and support research and policies that further carbon-free dispatchable technologies. • Partner with LPCs and other customers and communities to support economy-wide decarbonization efforts and the strategic electrification of other sectors, such as transportation. • Maintain nuclear generation, hydro generation, and a strong transmission grid as key enabling assets. • Be transparent with stakeholders in measuring and sharing TVA's progress, and listen and work effectively with all its stakeholders to understand their priorities and needs. • Adapt to new technologies and changing policies, and be willing and open to changing TVA's plans and projects to achieve deep carbon reduction.
TVA constructed water tanks on site and is purchasing cooling water from MLGW in lieu of utilizing the projection wells. Purchasing cooling water in combination with the use of water tanks, rather than wells, could impose some operational limitations, such as limitations on capacity, on the Allen CC due to lower availability of cooling water.
TVA constructed water tanks on site and is purchasing cooling water from MLGW in lieu of utilizing the production wells. Purchasing cooling water in combination with the use of water tanks, rather than wells, could impose some operational limitations, such as limitations on capacity, on the Allen CC due to lower availability of cooling water.
In addition to power bonds and discount notes, TVA had long-term debt associated with certain VIEs outstanding at September 30, 2022. See Lease Financing below, Note 11 — Variable Interest Entities , and Note 14 — Debt and Other Obligations for additional information.
In addition to power bonds and discount notes, TVA had long-term debt associated with certain VIEs outstanding at September 30, 2023. See Lease Financing below, Note 11 — Variable Interest Entities , and Note 14 — Debt and Other Obligations for additional information.
TVA's mortality assumptions are based upon actuarial projections in combination with actuarial studies of the actual mortality experience of TVARS's pension and post-retirement benefit plan participants taking into consideration the Society of Actuaries ("SOA") mortality table and projection scales as of September 30, 2022.
TVA's mortality assumptions are based upon actuarial projections in combination with actuarial studies of the actual mortality experience of TVARS's pension and post-retirement benefit plan participants taking into consideration the Society of Actuaries ("SOA") mortality table and projection scales as of September 30, 2023.
TVA adjusts for nonperformance risk, both of TVA (for liabilities) and the counterparty (for assets), by applying a CVA. 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.
TVA adjusts for nonperformance risk, both of TVA (for liabilities) and the counterparty (for assets), by applying a credit valuation adjustment ("CVA"). 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.
TVA uses proceeds from the issuance of discount notes, in addition to other sources of liquidity, to fund short-term cash needs and scheduled maturities of long-term debt. The following table provides additional information regarding TVA's short-term borrowings.
TVA uses proceeds from the issuance of discount notes, in addition to other sources of liquidity, to fund short-term cash needs and scheduled maturities of long-term debt. 72 Table of Contents The following table provides additional information regarding TVA's short-term borrowings.
See Note 22 — Related Parties . TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment in 2014; therefore, the repayment of this amount is no longer a component of rate setting.
See Note 23 — Related Parties . TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment in 2014; therefore, the repayment of this amount is no longer a component of rate setting.
First, the date of the plant's retirement must be estimated. At Browns Ferry and Sequoyah, the estimated retirement date is based on the unit with the longest license period remaining. At Watts Bar, the estimated retirement date is based on each unit's license period. Second, an assumption must be made on the timing of the decommissioning.
At Browns Ferry and Sequoyah, the estimated retirement date is based on the unit with the longest license period remaining. At Watts Bar, the estimated retirement date is based on each unit's license period. Second, an assumption must be made on the timing of the decommissioning.
The average interest rate that TVA received on its short-term investments during 2022 was slightly less than one percent. If the rates of interest that TVA received on its short-term investments during 2022 were zero percent, TVA would have received approximately $4 million less in interest from its short-term investments.
The average interest rate that TVA received on its short-term investments during 2022 was slightly less than one percent. If the rates that TVA received on its short-term investments during 2022 were exactly zero percent, TVA would have received approximately $4 million less in interest from its short-term investments.
Fiber Optic Network . In 2017, the TVA Board authorized up to $300 million to be spent over the next 10 years, subject 74 Table of Contents to annual budget availability and necessary environmental reviews, to build an enhanced fiber optic network that will better connect TVA's operational assets. Fiber is a vital part of TVA's modern communication infrastructure.
In 2017, the TVA Board authorized up to $300 million to be spent over the next 10 years, subject to annual budget availability and necessary environmental reviews, to build an enhanced fiber optic network that will better connect TVA's operational assets. Fiber is a vital part of TVA's modern communication infrastructure.
TVA also performs pricing tests on various portfolios comprised of securities classified in Levels 1 and 2 on a quarterly basis to confirm accuracy of 83 Table of Contents the values received from the investment portfolio trustee. For plan investments, TVARS reviews the trustee's Service Organization Controls report and the pricing policies of the trustee's largest pricing vendor. Derivatives.
TVA also performs pricing tests on various portfolios comprised of securities classified in Levels 1 and 2 on a quarterly basis to confirm accuracy of the values received from the investment portfolio trustee. For plan investments, TVARS reviews the trustee's Service Organization Controls report and the pricing policies of the trustee's largest pricing vendor. Derivatives.
For additional information about TVA debt issuance activity and debt instruments issued and outstanding at September 30, 2022 and 2021, including rates, maturities, outstanding principal amounts, and redemption features, see Note 14 — Debt and Other Obligations — Debt Securities Activity and Debt Outstanding .
For additional information about TVA debt issuance activity and debt instruments issued and outstanding at September 30, 2023 and 2022, including rates, maturities, outstanding principal amounts, and redemption features, see Note 14 — Debt and Other Obligations — Debt Securities Activity and Debt Outstanding .
The updated policies enable LPC investment in public charging infrastructure and allow for the conditional resale of electricity, for transportation purposes only, by any charging developer on a $/kWh basis. The optional wholesale rate was developed with high power EV charging in mind and provides a stable option for those developing charging infrastructure.
The updated policies enable LPC investment in public charging infrastructure 79 Table of Contents and allow for the conditional resale of electricity, for transportation purposes only, by any charging developer on a $/kWh basis. The optional wholesale rate was developed with high power EV charging in mind and provides a stable option for those developing charging infrastructure.
The demand charges are based upon the customer's peak monthly usage and increase as the peak increases. The energy charges are based on time differentiated kWh used by the customer. Both of these components can be significantly impacted by weather. The GAC captures a portion of fixed costs and is offset by a corresponding reduction to the energy rates.
The demand charges are based upon the customer's peak monthly usage. The energy charges are based on time differentiated kWh used by the customer. Both of these components can be significantly impacted by weather. The GAC captures a portion of fixed costs and is offset by a corresponding reduction to the energy rates.
The amendments, among other things, add an additional 50-year period after the end of the post-closure care period, require TVA to submit recommendations as to what activities must be performed during this 50-year period to protect human health and the environment, and require TVA to submit revised closure plans every 10 years. Allen Groundwater Investigation .
The amendments, among other things, add an additional 50-year period after the end of the post-closure care period, require TVA to submit recommendations as to what activities must be performed during this 50-year period to protect human health and the environment, and require TVA to submit revised closure plans every 10 years.
These securities are held in the Nuclear Decommissioning Trust ("NDT"), Asset Retirement Trust ("ART"), Supplemental Executive Retirement Plan ("SERP"), Deferred Compensation Plan ("DCP"), and qualified benefit pension plan. Investment Funds .
These securities are held in the Nuclear Decommissioning Trust ("NDT"), Asset Retirement Trust ("ART"), Supplemental Executive Retirement Plan ("SERP"), Deferred Compensation Plan ("DCP"), Restoration Plan ("RP"), and qualified benefit pension plan. Investment Funds .
TVA's interest rate swaps, currency swaps, and commodity derivatives under the Financial Hedging Program ("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.
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.
Other factors TVA considers when determining whether a market is active or inactive include the presence of government or regulatory control over pricing that could make it difficult to establish a market-based price upon entering into a transaction. Nonperformance Risk .
Other factors TVA considers when determining whether a 87 Table of Contents market is active or inactive include the presence of government or regulatory control over pricing that could make it difficult to establish a market-based price upon entering into a transaction. Nonperformance Risk .
TVA does not engage, and does not control any entity that is engaged, in any activity listed under Section 13(r) of the Securities Exchange Act of 1934 (the "Exchange Act"), which requires certain issuers to disclose certain activities relating to Iran 86 Table of Contents involving the issuer and its affiliates.
TVA does not engage, and does not control any entity that is engaged, in any activity listed under Section 13(r) of the Securities Exchange Act of 1934 (the "Exchange Act"), which requires certain issuers to disclose certain activities relating to Iran involving the issuer and its affiliates.
The following chart compares TVA's sales of electricity by customer type for the years ended September 30, 2022 and 2021: Sales of Electricity For the years ended September 30 (millions of kWh) The following charts show a breakdown of TVA's energy load: Note Information included in the charts above was derived from energy usage of directly served customers and customers served by LPCs during calendar year 2021, and these graphs will continue to be updated on a calendar year basis. 63 Table of Contents Weather affects both the demand for TVA power and the price for that power.
The following chart compares TVA's sales of electricity by customer type for the years ended September 30, 2023 and 2022: Sales of Electricity For the years ended September 30 (millions of kWh) The following charts show a breakdown of TVA's energy load: Note Information included in the charts above was derived from energy usage of directly served customers and customers served by LPCs during calendar year ("CY") 2022, and these graphs will continue to be updated on a CY basis. 66 Table of Contents Weather affects both the demand for TVA power and the price for that power.
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. See Note 16 — Fair Value Measurements — Valuation Techniques for a discussion of valuation levels of the investments. Plan Investments .
There are no readily available quoted exchange prices for these investments. The fair value of these investments is 86 Table of Contents based on information provided by the investment managers. These investments are valued on a quarterly basis. See Note 16 — Fair Value Measurements — Valuation Techniques for a discussion of valuation levels of the investments. Plan Investments .
On May 12, 2021, President Biden signed EO 14028, "Improving the Nation's Cybersecurity." This EO is intended to improve the nation's cybersecurity posture and protect federal government networks by improving information-sharing between the U.S. government and the private sector on cyber issues and strengthening the United States' ability to respond to incidents 80 Table of Contents when they occur.
On May 12, 2021, President Biden signed EO 14028, "Improving the Nation's Cybersecurity." This EO is intended to improve the nation's cybersecurity posture and protect federal government networks by improving information-sharing between the U.S. government and the private sector on cyber issues and strengthening the United States' ability to respond to incidents when they occur.
At September 30, 2022 and 2021, an immediate 10 percent decrease in the price of the investments in the trust would have reduced the value of the trust by $106 million and $113 million, respectively. Qualified Pension Plan . In 2021, a new asset allocation plan was put in place to reduce risk and volatility in the TVARS investment portfolio.
At September 30, 2023 and 2022, an immediate 10 percent decrease in the price of the investments in the trust would have reduced the value of the trust by $124 million and $106 million, respectively. Qualified Pension Plan . In 2021, a new asset allocation policy was put in place to reduce risk and volatility in the TVARS investment portfolio.
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 its activities, as a result of catastrophic events or otherwise. As of September 30, 2022, TVA had accrued approximately $11 million with respect to Legal Proceedings.
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 its activities, as a result of catastrophic events or otherwise. As of September 30, 2023, TVA had accrued approximately $28 million with respect to Legal Proceedings.
At September 30, 2022 and 2021, an immediate 10 percent decrease in the price of the investments in the trust would have reduced the value of the trust by $252 million and $281 million, respectively. Asset Retirement Trust. The ART is presently invested to achieve a return in line with overall equity and debt market performance.
At September 30, 2023 and 2022, an immediate 10 percent decrease in the price of the investments in the trust would have reduced the value of the trust by $279 million and $252 million, respectively. Asset Retirement Trust. The ART is presently invested to achieve a return in line with overall equity and debt market performance.
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in TVA's Annual Report on Form 10-K for the year ended September 30, 2021, filed with the Securities and Exchange Commission ("SEC") on November 12, 2021, for a discussion of variance drivers for the year ended September 30, 2021, as compared to the year ended September 30, 2020.
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in TVA's Annual Report on Form 10-K for the year ended September 30, 2022, filed with the Securities and Exchange Commission ("SEC") on November 15, 2022, for a discussion of variance drivers for the year ended September 30, 2022, as compared to the year ended September 30, 2021.
The rate test for the one-year period ended September 30, 2022, was calculated after the end of 2022, and TVA met the test's requirements.
The rate test for the one-year period ended September 30, 2023, was calculated after the end of 2023, and TVA met the test's requirements.
The timing and level of cash flows from operations can be affected by the weather, changes in working capital, commodity price fluctuations, outages, and other project expenses. Net cash flows provided by operating activities decreased $308 million for the year ended September 30, 2022, as compared to 2021.
The timing and level of cash flows from operations can be affected by the weather, changes in working capital, commodity price fluctuations, outages, and other project expenses. Net cash flows provided by operating activities decreased $76 million for the year ended September 30, 2023, as compared to 2022.
Under this program ("CCR Program"), TVA performed stability remediation, completed the conversion of all operational coal-fired plants to dry CCR storage, and is now closing all remaining wet storage facilities. Dry generation and dewatering projects .
Under this program ("CCR Program"), TVA performed stability remediation, completed the conversion of all operational coal-fired plants to dry CCR storage, and is now closing all remaining wet storage facilities. 81 Table of Contents Dry generation and dewatering projects .
A 10 percent change in TVA's forecasted costs for non-nuclear decommissioning activities at September 30, 2022, would have affected the liability by approximately $352 million. Fair Value Measurements Investments. Investment funds are comprised of equity securities and debt securities and are classified as trading.
A 10 percent change in TVA's forecasted costs for non-nuclear decommissioning activities at September 30, 2023, would have affected the liability by approximately $368 million. Fair Value Measurements Investments. Investment funds are comprised of equity securities and debt securities and are classified as trading.
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 last experience study in 2018. See Note 20 — Benefit Plans for explanations of changes in assumptions and estimates. Expected Return on Plan Assets .
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. See Note 20 — Benefit Plans for explanations of changes in assumptions and estimates. Expected Return on Plan Assets .
At September 30, 2022 and 2021, the average interest rate of TVA's debt portfolio was 4.65 percent and 4.51 percent, respectively. See Note 14 — Debt and Other Obligations — Debt Outstanding for a schedule of TVA's debt maturities. Interest Rate Derivatives. Changes in interest rates also affect the mark-to-market ("MtM") valuation of TVA's interest rate derivatives.
At September 30, 2023 and 2022, the average interest rate of TVA's debt portfolio was 4.61 percent and 4.65 percent, respectively. See Note 14 — Debt and Other Obligations — Debt Outstanding for a schedule of TVA's debt maturities. Interest Rate Derivatives. Changes in interest rates also affect the mark-to-market ("MtM") valuation of TVA's interest rate derivatives.
Business and Mission Business TVA operates the nation's largest public power system. At September 30, 2022, TVA had 58 directly served customers, which include seven federal agency customers, and 153 local power company customers ("LPCs") that serve approximately 10 million people in parts of seven southeastern states.
Business and Mission Business TVA operates the nation's largest public power system. At September 30, 2023, TVA had 60 directly served customers, which include seven federal agency customers, and 153 local power company customers ("LPCs") that serve approximately 10 million people in parts of seven southeastern states.
(2) Includes commitments for energy and/or capacity under power purchase agreements ("PPAs") from coal-fired, hydroelectric, diesel, renewable, and gas-fired facilities, as well as transmission service agreements to support purchases of power from the market. Certain PPAs are accounted for as leases and have lease 72 Table of Contents and non-lease components.
(2) Includes commitments for energy and/or capacity under power purchase agreements ("PPAs") from hydroelectric, diesel, renewable, and gas-fired facilities, as well as transmission service agreements to support purchases of power from the market. Certain PPAs are accounted for as leases and have lease and non-lease components.
An immediate 10 percent decline in the market price of natural gas on September 30, 2022 and 2021, would have resulted in decreases of approximately $18 million and $49 million, respectively, in the fair value of TVA's natural gas derivative instruments at these dates. Commodity Derivatives under the FHP.
An immediate 10 percent decline in the market price of natural gas on September 30, 2023 and 2022, would have resulted in decreases of approximately $1 million and $18 million, respectively, in the fair value of TVA's natural gas derivative instruments at these dates. Commodity Derivatives under the FHP.
TVA continues to investigate and evaluate remedies and will continue posting semi-annual progress reports on the status of remedy selection until the final remedy is selected. The cost of these final remedies cannot reasonably be predicted until investigations and evaluations are complete and remedial methods are selected.
TVA continues to investigate and evaluate remedies for its other plants and will continue posting semi-annual progress reports on the status of remedy selection until the final remedy is selected. The cost of these final remedies cannot reasonably be predicted until investigations and evaluations are complete and remedial methods are selected.
Under the consent order, TVA agreed to close the existing ash facility by removal, either to an onsite landfill or to an offsite facility. TVA may also consider options for beneficial reuse of the CCR.
Under the consent order, TVA agreed to close the existing ash facility by removal, either to an on-site landfill or to an offsite facility. TVA may also consider options for beneficial reuse of the CCR.
In addition to affecting the amount of interest that TVA receives from its short-term investments, changes in interest rates could affect the value of the investments in its pension plan, ART, NDT, SERP, and DCP. See Risk Management Activities — Investment Price Risk above. 88 Table of Contents Short-Term Debt .
In addition to affecting the amount of interest that TVA receives from its short-term investments, changes in interest rates could affect the value of the investments in its NDT, ART, pension plan, SERP, DCP, and RP. See Risk Management Activities — Investment Price Risk above. Short-Term Debt .
TVA has cataloged major short-term and long-term enterprise level risks across the organization. A discussion of significant risks is presented in Item 1A, Risk Factors. Commodity Price Risk TVA is exposed to effects of market fluctuations in the price of commodities that are critical to its operations, including electricity, coal, and natural gas.
TVA has cataloged major short-term and long-term enterprise level risks across the organization. A discussion of significant risks is presented in Part I, Item 1A, Risk Factors. 90 Table of Contents Commodity Price Risk TVA is exposed to effects of market fluctuations in the price of commodities that are critical to its operations, including electricity, coal, and natural gas.
This change is primarily driven by an increase in the tax equivalents collected in the fuel cost recovery. Generating Sources.
This change is primarily driven by an decrease in the tax equivalents collected in the fuel cost recovery. Generating Sources.
See Note 8 — Leases , Note 11 — Variable Interest Entities , Note 14 — Debt and Other Obligations , and Note 20 — Benefit Plans for the obligations and commitments attributable to leases, VIEs and membership interests of VIEs subject to mandatory redemption, debt and leaseback obligations, and the retirement plan, respectively, for remaining amounts.
See Note 8 — Leases , Note 11 — Variable Interest Entities , Note 14 — Debt and Other Obligations , Note 20 — Benefit Plans and Note 22 — Commitments and Contingencies for the obligations and commitments attributable to leases, VIEs and membership interests of VIEs subject to mandatory redemption, debt and leaseback obligations, the retirement plan, and unconditional purchase obligations, respectively, for remaining amounts.
In 2022, the TVA Board approved the New Nuclear Program and approved up to $200 million to explore advanced reactor technology options. Of this amount, TVA had spent approximately $13 million as of September 30, 2022. The New Nuclear Program provides a systematic roadmap for TVA’s exploration of advanced nuclear technology.
In 2022, the TVA Board approved the New Nuclear Program and approved up to $200 million to explore advanced reactor technology options. Of this amount, TVA had spent $100 million as of September 30, 2023. The New Nuclear Program provides a systematic roadmap for TVA’s exploration of advanced nuclear technology.
The new digital system will have higher capacity and speed, for communications with the TVA grid and for inputs from monitoring equipment, which will also network the new control center with existing locations and enable better remote visibility and control to help mitigate reliability implications of climate change. The system is expected to be complete in 2026.
The new digital system will have higher capacity and speed for communications with the TVA grid and for inputs from monitoring equipment, will network the new control center with existing locations, and will enable better remote visibility and control to help mitigate reliability implications of climate change. The system is expected to be complete in CY 2027.
See Item 1A, Risk Factors — Cybersecurity Risks — TVA's facilities and information infrastructure may not operate as planned due to cyber threats to TVA's assets and operations .
See Part I, Item 1A, Risk Factors — Cybersecurity and Information Technology Risks — TVA's facilities and information infrastructure may not operate as planned due to cyber threats to TVA's assets and operations .
TVA is also evaluating the impact of retiring the balance of the coal-fired fleet by 2035. TVA will prepare environmental reviews pursuant to the National Environmental Policy Act ("NEPA") prior to making a decision on retiring or building any plant.
TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035. TVA will prepare environmental reviews pursuant to NEPA prior to making a decision on retiring or building any plant.
At September 30, 2022 and 2021, an immediate 10 percent decrease in the value of the net assets of the fund would have reduced the value of the fund by approximately $809 million and $911 million, respectively. Supplemental Executive Retirement Plan .
At September 30, 2023 and 2022, an immediate 10 percent decrease in the value of the net assets of the fund would have reduced the value of the fund by approximately $813 million and $809 million, respectively. Supplemental Executive Retirement Plan .
Liquidity and Capital Resources Sources of Liquidity TVA depends on various sources of liquidity to meet cash needs and contingencies. TVA's primary sources of liquidity are cash from operations and proceeds from the issuance of short-term debt in the form of discount notes, along with periodic issuances of long-term debt.
See Note 20 — Benefit Plans . Liquidity and Capital Resources Sources of Liquidity TVA depends on various sources of liquidity to meet cash needs and contingencies. TVA's primary sources of liquidity are cash from operations and proceeds from the issuance of short-term debt in the form of discount notes, along with periodic issuances of long-term debt.
In establishing health care cost trend rates for the post-retirement obligation, TVA reviews actual recent cost trends and projected future trends considering health care inflation, changes in health care utilization, and 85 Table of Contents changes in plan benefits and premium experience.
In establishing health care cost trend rates for the post-retirement obligation, 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.
In 2021, TVA began a partnership with the State of Tennessee for the development and funding of Fast Charge Tennessee, the portion of the Fast Charge Network that covers Tennessee, and in 2022 TVA launched the Fast Charge Network. As of September 30, 2022, four sites were complete and operational with 28 additional sites under contract for development.
In 2021, TVA began a partnership with the State of Tennessee for the development and funding of Fast Charge Tennessee, the portion of the Fast Charge Network that covers Tennessee, and in 2022 TVA launched the Fast Charge Network. As of September 30, 2023, 15 sites were complete and operational with 55 additional sites under contract for development.
This risk is somewhat mitigated by the fact that TVA's debt portfolio is diversified in terms of maturities and has a long average life. At September 30, 2022 and 2021, the average life of TVA's debt portfolio was 15.96 years and 15.69 years, respectively.
This risk is somewhat mitigated by the fact that TVA's debt portfolio is diversified in terms of maturities and has a long average life. At September 30, 2023 and 2022, the average life of TVA's debt portfolio was 14.43 years and 15.96 years, respectively.
The new fiber optic lines will improve the reliability and resiliency of the generation and transmission system while enabling the system to better accommodate DER as they enter the market. As of September 30, 2022 , TVA had spent $197 million on installation of the fiber optic lines and expects to spend an additional $103 million through 2027.
The new fiber optic lines will improve the reliability and resiliency of the generation and transmission system while enabling the system to better accommodate DER as they enter the market. As of September 30, 2023 , TVA had spent $245 million on installation of the fiber optic lines and expects to spend an additional $55 million through 2027.
A 10 percent change in TVA's forecasted costs for nuclear decommissioning activities at September 30, 2022, would have affected the liability by approximately $364 million. Non-Nuclear Decommissioning.
A 10 percent change in TVA's forecasted costs for nuclear decommissioning activities at September 30, 2023, would have affected the liability by approximately $381 million. Non-Nuclear Decommissioning.
As of September 30, 2022, TVA had spent approximately $44 million on the project and expects to spend an additional $46 million. Automated Energy Exchange Platform. In October 2021, an automated energy exchange, the Southeast Energy Exchange Market ("SEEM"), took effect. The exchange was created to facilitate more short-term power exchanges and will be an enhancement to the existing market.
As of September 30, 2023, TVA had spent $59 million on the project and expects to spend an additional $49 million. Automated Energy Exchange Platform. In October 2021, an automated energy exchange, the Southeast Energy Exchange Market ("SEEM"), took effect. The exchange was created to facilitate more short-term power exchanges and will be an enhancement to the existing market.
("Jacobs") to oversee aspects of the cleanup. After the cleanup was completed, Jacobs was sued in the U.S. District Court for the Eastern District of Tennessee ("Eastern District") by employees of a contractor involved in the cleanup and family members of some of the employees.
("Jacobs") to oversee aspects of the cleanup. After the cleanup was completed, Jacobs was sued in the U.S. District Court for the Eastern District of Tennessee ("Eastern District") by employees of a contractor involved in the cleanup and family members of some of the employees. Other contractor employees and family members also filed lawsuits against Jacobs in the Eastern District.
The TVARS asset allocation policy for qualified pension plan assets has targets of 17 percent growth assets, 38 percent defensive growth assets, 20 percent defensive assets, and 25 percent inflation-sensitive assets.
The TVARS asset allocation policy for qualified pension plan assets has targets of 17 percent growth assets, 30 percent defensive growth assets, 33 percent defensive assets, and 20 percent inflation-sensitive assets.
Power bonds outstanding, excluding unamortized discounts and premiums and net exchange gains from foreign currency transactions, at September 30, 2022 and 2021, were $19.3 billion (including current maturities) and $19.4 billion (including current maturities), respectively.
Bonds outstanding, excluding unamortized discounts and premiums and net exchange gains from foreign currency transactions, at September 30, 2023 and 2022, were $19.5 billion (including current maturities) and $19.3 billion (including current maturities), respectively.
(2) Includes average balances of long-term power bonds, debt of VIEs, and discount notes. (3) Includes interest on long-term power bonds, debt of VIEs, and discount notes. Total interest expense decreased $36 million for the year ended September 30, 2022, as compared to the prior year.
(2) Includes average balances of long-term power bonds, debt of VIEs, and discount notes. (3) Includes interest on long-term power bonds, debt of VIEs, and discount notes. Total interest expense increased $4 million for the year ended September 30, 2023, as compared to the prior year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and qualitative disclosures about market risk are reported in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Activities , which discussion is incorporated by reference into this Item 7A, Quantitative and Qualitative Disclosures About Market Risk. 89 Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and qualitative disclosures about market risk are reported in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Activities , which discussion is incorporated by reference into this Item 7A, Quantitative and Qualitative Disclosures About Market Risk. 93 Table of Contents

Other TVE 10-K year-over-year comparisons