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Name | Symbol | Market | Type |
---|---|---|---|
Tennessee Valley Authority | NYSE:TVC | NYSE | Exchange Traded Fund |
Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.03 | 0.14% | 22.09 | 22.09 | 22.00 | 22.03 | 9,623 | 01:00:00 |
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A corporate agency of the United States created by an act of Congress
(State or other jurisdiction of incorporation or organization)
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62-0474417
(I.R.S. Employer Identification No.)
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400 W. Summit Hill Drive
Knoxville, Tennessee
(Address of principal executive offices)
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37902
(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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N/A
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N/A
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N/A
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Table of Contents
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Page
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GLOSSARY OF COMMON ACRONYMS......................................................................................................................................
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FORWARD-LOOKING INFORMATION.........................................................................................................................................
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GENERAL INFORMATION............................................................................................................................................................
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ITEM 1. FINANCIAL STATEMENTS.............................................................................................................................................
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Consolidated Statements of Operations (Unaudited)............................................................................................................
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Consolidated Statements of Comprehensive Income (Loss) (Unaudited)............................................................................
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Consolidated Balance Sheets (Unaudited)...........................................................................................................................
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Consolidated Statements of Cash Flows (Unaudited)..........................................................................................................
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Consolidated Statements of Changes in Proprietary Capital (Unaudited)............................................................................
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Notes to Consolidated Financial Statements (Unaudited)....................................................................................................
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...
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Executive Overview...............................................................................................................................................................
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Results of Operations............................................................................................................................................................
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Liquidity and Capital Resources............................................................................................................................................
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Key Initiatives and Challenges..............................................................................................................................................
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Environmental Matters..........................................................................................................................................................
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Legal Proceedings................................................................................................................................................................
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Off-Balance Sheet Arrangements..........................................................................................................................................
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Critical Accounting Policies and Estimates...........................................................................................................................
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New Accounting Standards and Interpretations....................................................................................................................
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Legislative and Regulatory Matters.......................................................................................................................................
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..............................................................
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ITEM 4. CONTROLS AND PROCEDURES..................................................................................................................................
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Disclosure Controls and Procedures.....................................................................................................................................
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Changes in Internal Control over Financial Reporting..........................................................................................................
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ITEM 1. LEGAL PROCEEDINGS..................................................................................................................................................
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ITEM 1A. RISK FACTORS............................................................................................................................................................
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ITEM 6. EXHIBITS........................................................................................................................................................................
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SIGNATURES...............................................................................................................................................................................
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GLOSSARY OF COMMON ACRONYMS
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Following are definitions of some of the terms or acronyms that may be used in this Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 (the "Quarterly Report"):
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Term or Acronym
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Definition
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AOCI
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Accumulated other comprehensive income (loss)
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ARO
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Asset retirement obligation
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ART
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Asset Retirement Trust
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ASLB
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Atomic Safety and Licensing Board
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Bonds
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Bonds, notes, or other evidences of indebtedness
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CAA
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Clean Air Act
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CCR
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Coal combustion residuals
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CME
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Chicago Mercantile Exchange
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CO2
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Carbon dioxide
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COLA
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Cost-of-living adjustment
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CSAPR
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Cross-State Air Pollution Rule
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CTs
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Combustion turbine unit(s)
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CVA
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Credit valuation adjustment
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CY
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Calendar year
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DCP
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Deferred Compensation Plan
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DER
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Distributed energy resources
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DOE
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Department of Energy
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EA
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Environmental Assessments
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EIS
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Environmental Impact Statement
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ELGs
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Effluent Limitation Guidelines
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EPA
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Environmental Protection Agency
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EPRI
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Electric Power Research Institute
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EPU
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Extended Power Uprate
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ESPA
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Early Site Permit Application
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FASB
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Financial Accounting Standards Board
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FCM
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Futures Commission Merchant
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FERC
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Federal Energy Regulatory Commission
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FTP
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Financial Trading Program
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GAAP
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Accounting principles generally accepted in the United States of America
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GHG
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Greenhouse gas
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GWh
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Gigawatt hour(s)
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HAP
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Hazardous Air Pollutants
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IRP
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Integrated Resource Plan
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JSCCG
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John Sevier Combined Cycle Generation LLC
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KOC
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Knoxville Office Complex
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kW
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Kilowatts
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kWh
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Kilowatt hours
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LPC
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Local power company customers
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MATS
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Mercury and Air Toxics Standards
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MD&A
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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mmBtu
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Million British thermal unit(s)
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MtM
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Mark-to-market
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MW
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Megawatts
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NAAQS
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National Ambient Air Quality Standards
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NAV
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Net asset value
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NDT
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Nuclear Decommissioning Trust
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NEIL
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Nuclear Electric Insurance Limited
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NEPA
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National Environmental Policy Act
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NERC
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North American Electric Reliability Corporation
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NOx
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Nitrogen oxide
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NPDES
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National Pollutant Discharge Elimination System
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NRC
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Nuclear Regulatory Commission
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NSR
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New Source Review
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OCI
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Other comprehensive income (loss)
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OCIP
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Owner Controlled Insurance Program
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PARRS
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Putable Automatic Rate Reset Securities
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PM
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Particulate matter
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QER
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Quadrennial Energy Review
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QTE
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Qualified technological equipment and software
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RECs
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Renewable Energy Certificates
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REIT
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Real Estate Investment Trust
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SCCG
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Southaven Combined Cycle Generation LLC
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SCRs
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Selective catalytic reduction systems
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SEC
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Securities and Exchange Commission
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SERP
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Supplemental Executive Retirement Plan
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SHLLC
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Southaven Holdco LLC
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SIPs
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State implementation plans
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SMR
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Small modular reactor(s)
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SO2
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Sulfur dioxide
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SPC
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Summer Place Complex
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TCWN
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Tennessee Clean Water Network
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TDEC
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Tennessee Department of Environment and Conservation
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TVA Act
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The Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. §§ 831-831ee
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TVARS
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Tennessee Valley Authority Retirement System
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U.S. Treasury
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United States Department of the Treasury
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VIE
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Variable interest entity
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XBRL
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eXtensible Business Reporting Language
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•
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New, amended, or existing laws, regulations, or administrative orders or interpretations, including those related to environmental matters, and the costs of complying with these laws, regulations, or administrative orders or interpretations;
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•
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The cost of complying with known, anticipated, or new emissions reduction requirements, some of which could render continued operation of many of TVA's aging coal-fired generation units not cost-effective or result in their removal from service, perhaps permanently;
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•
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Significant reductions in demand for electricity produced through non-renewable or centrally located generation sources that may result from, among other things, economic downturns, increased energy efficiency and conservation, increased utilization of distributed generation and microgrids, and improvements in alternative generation and energy storage technologies;
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•
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Changes in customer preferences for energy produced from cleaner generation sources;
|
•
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Changes in technology;
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•
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Actions taken, or inaction, by the U.S. government relating to the national or TVA debt ceiling or automatic spending cuts in government programs;
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•
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Costs or liabilities that are not anticipated in TVA's financial statements for third-party claims, natural resource damages, environmental cleanup activities, or fines or penalties associated with unexpected events such as failures of a facility or infrastructure;
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•
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Addition or loss of customers by TVA or the local power company customers ("LPCs");
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•
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Significant delays, cost increases, or cost overruns associated with the construction and maintenance of generation, transmission, navigation, flood control, or related assets;
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•
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Requirements or decisions changing the amount or timing of funding obligations associated with TVA's pension plans, other post-retirement benefit plans, or health care plans;
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•
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Increases in TVA's financial liabilities for decommissioning its nuclear facilities or retiring other assets;
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•
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Risks associated with the operation of nuclear facilities or other generation and related facilities, including coal combustion residuals ("CCR") facilities;
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•
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Physical attacks on TVA's assets;
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•
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Cyber attacks on TVA's assets or the assets of third parties upon which TVA relies;
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•
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The outcome of legal or administrative proceedings;
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•
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The failure of TVA's generation, transmission, navigation, flood control, and related assets and infrastructure, including CCR facilities, to operate as anticipated, resulting in lost revenues, damages, or other costs that are not reflected in TVA's financial statements or projections;
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•
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Differences between estimates of revenues and expenses and actual revenues earned and expenses incurred;
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•
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Weather conditions;
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•
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Catastrophic events such as fires, earthquakes, explosions, solar events, electromagnetic pulses ("EMP"), geomagnetic disturbances ("GMDs"), droughts, floods, hurricanes, tornadoes, or other casualty events or pandemics, wars, national emergencies, terrorist activities, or other similar events, especially if these events occur in or near TVA's service area;
|
•
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Events at a TVA facility, which, among other things, could result in loss of life, damage to the environment, damage to or loss of the facility, and damage to the property of others;
|
•
|
Events or changes involving transmission lines, dams, and other facilities not operated by TVA, including those that affect the reliability of the interstate transmission grid of which TVA's transmission system is a part and those that increase flows across TVA's transmission grid;
|
•
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Disruption of fuel supplies, which may result from, among other things, economic conditions, weather conditions, production or transportation difficulties, labor challenges, or environmental laws or regulations affecting TVA's fuel suppliers or transporters;
|
•
|
Purchased power price volatility and disruption of purchased power supplies;
|
•
|
Events which affect the supply of water for TVA's generation facilities;
|
•
|
Changes in TVA's determinations of the appropriate mix of generation assets;
|
•
|
Ineffectiveness of TVA's efforts at adapting its organization to an evolving marketplace and remaining cost competitive;
|
•
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Inability to use regulatory accounting or loss of regulatory accounting approval for certain costs;
|
•
|
Inability to obtain, or loss of, regulatory approval for the construction or operation of assets;
|
•
|
The requirement or decision to make additional contributions to TVA's Nuclear Decommissioning Trust ("NDT") or Asset Retirement Trust ("ART");
|
•
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Limitations on TVA's ability to borrow money which may result from, among other things, TVA's approaching or substantially reaching the limit on bonds, notes, and other evidences of indebtedness specified in the Tennessee Valley Authority Act of 1933 (the "TVA Act");
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•
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An increase in TVA's cost of capital that may result from, among other things, changes in the market for TVA's debt securities, changes in the credit rating of TVA or the U.S. government, or, potentially, an increased reliance by TVA on alternative financing should TVA approach its debt limit;
|
•
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Changes in the economy and volatility in financial markets;
|
•
|
Reliability or creditworthiness of counterparties;
|
•
|
Changes in the market price of commodities such as coal, uranium, natural gas, fuel oil, crude oil, construction materials, reagents, electricity, or emission allowances;
|
•
|
Changes in the market price of equity securities, debt securities, or other investments;
|
•
|
Changes in interest rates, currency exchange rates, or inflation rates;
|
•
|
Ineffectiveness of TVA's disclosure controls and procedures or its internal control over financial reporting;
|
•
|
Inability to eliminate identified deficiencies in TVA's systems, standards, controls, or corporate culture;
|
•
|
Inability to attract or retain a skilled workforce;
|
•
|
Inability to respond quickly enough to current or potential customer demands or needs;
|
•
|
Events at a nuclear facility, whether or not operated by or licensed to TVA, which, among other things, could lead to increased regulation or restriction on the construction, ownership, operation, or decommissioning of nuclear facilities or on the storage of spent fuel, obligate TVA to pay retrospective insurance premiums, reduce the availability and affordability of insurance, increase the costs of operating TVA's existing nuclear units, or cause TVA to forego future construction at these or other facilities;
|
•
|
Loss of quorum of the TVA Board of Directors (the "TVA Board");
|
•
|
Changes in the priorities of the TVA Board or TVA senior management; or
|
•
|
Other unforeseeable events.
|
|
2019
|
|
2018
|
||||
Operating revenues
|
|
|
|
||||
Revenue from sales of electricity
|
$
|
2,532
|
|
|
$
|
2,681
|
|
Other revenue
|
46
|
|
|
44
|
|
||
Total operating revenues
|
2,578
|
|
|
2,725
|
|
||
Operating expenses
|
|
|
|
|
|
||
Fuel
|
423
|
|
|
441
|
|
||
Purchased power
|
219
|
|
|
297
|
|
||
Operating and maintenance
|
689
|
|
|
745
|
|
||
Depreciation and amortization
|
584
|
|
|
345
|
|
||
Tax equivalents
|
131
|
|
|
132
|
|
||
Total operating expenses
|
2,046
|
|
|
1,960
|
|
||
Operating income
|
532
|
|
|
765
|
|
||
Other income (expense), net
|
12
|
|
|
24
|
|
||
Other net periodic benefit cost
|
65
|
|
|
64
|
|
||
Interest expense
|
287
|
|
|
302
|
|
||
Net income (loss)
|
$
|
192
|
|
|
$
|
423
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
192
|
|
|
$
|
423
|
|
Other comprehensive income (loss)
|
|
|
|
||||
Net unrealized gain (loss) on cash flow hedges
|
76
|
|
|
(52
|
)
|
||
Reclassification to earnings from cash flow hedges
|
(59
|
)
|
|
18
|
|
||
Total other comprehensive income (loss)
|
17
|
|
|
(34
|
)
|
||
Total comprehensive income (loss)
|
$
|
209
|
|
|
$
|
389
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
ASSETS
|
|||||||
|
December 31, 2019
|
|
September 30, 2019
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
304
|
|
|
$
|
299
|
|
Accounts receivable, net
|
1,427
|
|
|
1,739
|
|
||
Inventories, net
|
1,052
|
|
|
999
|
|
||
Regulatory assets
|
159
|
|
|
156
|
|
||
Other current assets
|
109
|
|
|
85
|
|
||
Total current assets
|
3,051
|
|
|
3,278
|
|
||
|
|
|
|
||||
Property, plant, and equipment
|
|
|
|
|
|
||
Completed plant
|
63,247
|
|
|
62,944
|
|
||
Less accumulated depreciation
|
(31,895
|
)
|
|
(31,384
|
)
|
||
Net completed plant
|
31,352
|
|
|
31,560
|
|
||
Construction in progress
|
1,972
|
|
|
1,893
|
|
||
Nuclear fuel
|
1,582
|
|
|
1,534
|
|
||
Finance leases
|
143
|
|
|
146
|
|
||
Total property, plant, and equipment, net
|
35,049
|
|
|
35,133
|
|
||
|
|
|
|
||||
Investment funds
|
3,163
|
|
|
2,968
|
|
||
|
|
|
|
||||
Regulatory and other long-term assets
|
|
|
|
|
|
||
Regulatory assets
|
8,410
|
|
|
8,763
|
|
||
Operating lease assets, net of amortization
|
192
|
|
|
—
|
|
||
Other long-term assets
|
334
|
|
|
325
|
|
||
Total regulatory and other long-term assets
|
8,936
|
|
|
9,088
|
|
||
|
|
|
|
||||
Total assets
|
$
|
50,199
|
|
|
$
|
50,467
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
LIABILITIES AND PROPRIETARY CAPITAL
|
|||||||
|
December 31, 2019
|
|
September 30, 2019
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
1,668
|
|
|
$
|
1,812
|
|
Accrued interest
|
303
|
|
|
296
|
|
||
Current portion of leaseback obligations
|
40
|
|
|
40
|
|
||
Regulatory liabilities
|
137
|
|
|
150
|
|
||
Short-term debt, net
|
895
|
|
|
922
|
|
||
Current maturities of power bonds
|
1,029
|
|
|
1,030
|
|
||
Current maturities of long-term debt of variable interest entities
|
39
|
|
|
39
|
|
||
Current maturities of notes payable
|
22
|
|
|
23
|
|
||
Total current liabilities
|
4,133
|
|
|
4,312
|
|
||
|
|
|
|
||||
Other liabilities
|
|
|
|
||||
Post-retirement and post-employment benefit obligations
|
6,062
|
|
|
6,181
|
|
||
Asset retirement obligations
|
5,588
|
|
|
5,453
|
|
||
Operating lease liabilities
|
130
|
|
|
—
|
|
||
Other long-term liabilities
|
2,201
|
|
|
2,490
|
|
||
Leaseback obligations
|
223
|
|
|
223
|
|
||
Total other liabilities
|
14,204
|
|
|
14,347
|
|
||
|
|
|
|
||||
Long-term debt, net
|
|
|
|
||||
Long-term power bonds, net
|
18,941
|
|
|
19,094
|
|
||
Long-term debt of variable interest entities, net
|
1,089
|
|
|
1,089
|
|
||
Total long-term debt, net
|
20,030
|
|
|
20,183
|
|
||
|
|
|
|
||||
Total liabilities
|
38,367
|
|
|
38,842
|
|
||
|
|
|
|
||||
Contingencies and legal proceedings (Note 19)
|
|
|
|
||||
|
|
|
|
||||
Proprietary capital
|
|
|
|
||||
Power program appropriation investment
|
258
|
|
|
258
|
|
||
Power program retained earnings
|
11,015
|
|
|
10,823
|
|
||
Total power program proprietary capital
|
11,273
|
|
|
11,081
|
|
||
Nonpower programs appropriation investment, net
|
554
|
|
|
556
|
|
||
Accumulated other comprehensive income (loss)
|
5
|
|
|
(12
|
)
|
||
Total proprietary capital
|
11,832
|
|
|
11,625
|
|
||
|
|
|
|
||||
Total liabilities and proprietary capital
|
$
|
50,199
|
|
|
$
|
50,467
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
192
|
|
|
$
|
423
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
|
|
|
|
|
||
Depreciation and amortization(1)
|
590
|
|
|
350
|
|
||
Amortization of nuclear fuel cost
|
93
|
|
|
81
|
|
||
Non-cash retirement benefit expense
|
81
|
|
|
79
|
|
||
Other regulatory amortization and deferrals
|
(3
|
)
|
|
22
|
|
||
Changes in current assets and liabilities
|
|
|
|
|
|
||
Accounts receivable, net
|
316
|
|
|
117
|
|
||
Inventories and other current assets, net
|
(88
|
)
|
|
(67
|
)
|
||
Accounts payable and accrued liabilities
|
(213
|
)
|
|
(343
|
)
|
||
Accrued interest
|
6
|
|
|
—
|
|
||
Pension contributions
|
(75
|
)
|
|
(75
|
)
|
||
Other, net
|
(61
|
)
|
|
(85
|
)
|
||
Net cash provided by operating activities
|
838
|
|
|
502
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
||
Construction expenditures
|
(465
|
)
|
|
(500
|
)
|
||
Nuclear fuel expenditures
|
(117
|
)
|
|
(97
|
)
|
||
Loans and other receivables
|
|
|
|
|
|
||
Advances
|
(2
|
)
|
|
—
|
|
||
Repayments
|
1
|
|
|
2
|
|
||
Other, net
|
(7
|
)
|
|
(6
|
)
|
||
Net cash used in investing activities
|
(590
|
)
|
|
(601
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
|
||
Long-term debt
|
|
|
|
|
|
||
Redemptions and repurchases of power bonds
|
(218
|
)
|
|
(1,002
|
)
|
||
Redemptions of notes payable
|
—
|
|
|
(1
|
)
|
||
Short-term debt issues (redemptions), net
|
(27
|
)
|
|
1,105
|
|
||
Payments on leases and leasebacks
|
(1
|
)
|
|
(1
|
)
|
||
Other, net
|
3
|
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(243
|
)
|
|
101
|
|
||
Net change in cash, cash equivalents, and restricted cash
|
5
|
|
|
2
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period
|
322
|
|
|
322
|
|
||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
327
|
|
|
$
|
324
|
|
|
|
|
|
||||
Supplemental disclosures
|
|
|
|
||||
Significant non-cash transactions
|
|
|
|
||||
Accrued capital and nuclear fuel expenditures
|
$
|
254
|
|
|
$
|
372
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
|
Power Program Appropriation Investment
|
|
Power Program Retained Earnings
|
|
Nonpower Programs Appropriation Investment, Net
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
||||||||||
Balance at September 30, 2018
|
$
|
258
|
|
|
$
|
9,404
|
|
|
$
|
564
|
|
|
$
|
57
|
|
|
$
|
10,283
|
|
Net income (loss)
|
—
|
|
|
425
|
|
|
(2
|
)
|
|
—
|
|
|
423
|
|
|||||
Total other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|||||
Return on power program appropriation investment
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Balance at December 31, 2018
|
$
|
258
|
|
|
$
|
9,827
|
|
|
$
|
562
|
|
|
$
|
23
|
|
|
$
|
10,670
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at September 30, 2019
|
$
|
258
|
|
|
$
|
10,823
|
|
|
$
|
556
|
|
|
$
|
(12
|
)
|
|
$
|
11,625
|
|
Net income (loss)
|
—
|
|
|
194
|
|
|
(2
|
)
|
|
—
|
|
|
192
|
|
|||||
Total other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
|||||
Return on power program appropriation investment
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Balance at December 31, 2019
|
$
|
258
|
|
|
$
|
11,015
|
|
|
$
|
554
|
|
|
$
|
5
|
|
|
$
|
11,832
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
Note
|
Page
|
||
1
|
|
Summary of Significant Accounting Policies
|
|
2
|
|
Impact of New Accounting Standards and Interpretations
|
|
3
|
|
Accounts Receivable, Net
|
|
4
|
|
Inventories, Net
|
|
5
|
|
Plant Closures
|
|
6
|
|
Leases
|
|
7
|
|
Other Long-Term Assets
|
|
8
|
|
Regulatory Assets and Liabilities
|
|
9
|
|
Variable Interest Entities
|
|
10
|
|
Other Long-Term Liabilities
|
|
11
|
|
Asset Retirement Obligations
|
|
12
|
|
Debt and Other Obligations
|
|
13
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
14
|
|
Risk Management Activities and Derivative Transactions
|
|
15
|
|
Fair Value Measurements
|
|
16
|
|
Revenue
|
|
17
|
|
Other Income (Expense), Net
|
|
18
|
|
Benefit Plans
|
|
19
|
|
Contingencies and Legal Proceedings
|
Cash, Cash Equivalents, and Restricted Cash
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Cash and cash equivalents
|
$
|
304
|
|
|
$
|
299
|
|
Restricted cash and cash equivalents included in Other long-term assets
|
23
|
|
|
23
|
|
||
Total cash, cash equivalents, and restricted cash
|
$
|
327
|
|
|
$
|
322
|
|
Lease Accounting
|
||||
Description
|
This guidance changes the provisions of recognition in both the lessee and lessor accounting models. The standard requires entities that lease assets ("lessees") to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with terms of more than 12 months, while also refining the definition of a lease. In addition, lessees are required to disclose key information about the amount, timing, and uncertainty of cash flows arising from leasing arrangements. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depend on its classification as a finance lease (formerly referred to as capital lease) or operating lease. The standard requires both types of leases to be recognized on the balance sheet. Operating leases will result in straight-line expense, while finance leases will result in recognition of interest on the lease liability separate from amortization expense. The accounting rules for the owner of assets leased by the lessee ("lessor accounting") remain relatively unchanged.
The standard allows for certain practical expedients to be elected related to lease term determination, separation of lease and non-lease elements, reassessment of existing leases, and short-term leases. The standard is to be applied using a modified retrospective transition.
|
|||
Effective Date for TVA
|
October 1, 2019
|
|||
Effect on the Financial Statements or Other Significant Matters
|
TVA has elected the modified retrospective method of adoption effective October 1, 2019. Under the modified retrospective method of adoption, prior year reported results are not restated.
TVA recorded $205 million and $210 million of lease assets and lease liabilities, respectively, for operating leases in effect at the adoption date. The accounting for finance leases remained substantially unchanged. Adoption of the standard did not materially impact results of operations or cash flows.
TVA has elected to apply the following practical expedients:
|
|||
|
Practical Expedient
|
Description
|
|
|
|
Package of transition practical expedients (for leases commenced prior to adoption date; expedients must be adopted as a package)
|
Do not need to (1) reassess whether any expired or existing contracts are leases or contain leases, (2) reassess the lease classification for any expired or existing leases, or (3) reassess initial direct costs for any existing leases.
|
|
|
|
Short-term lease expedient (elect by class of underlying asset)
|
Elect as an accounting policy to not apply the recognition requirements to short-term leases by asset class.
|
|
|
|
Existing and expired land easements not previously accounted for as leases
|
Elect to not evaluate existing or expired easements under the new guidance and carry forward current accounting treatment.
|
|
|
|
Comparative reporting requirements for initial adoption
|
Elect to apply transition requirements at adoption date, recognize cumulative effect adjustment to retained earnings in period of adoption, and not apply the new requirements to comparative periods, including disclosures.
|
|
|
|
|
|
|
Accounts Receivable, Net
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Power receivables
|
$
|
1,326
|
|
|
$
|
1,624
|
|
Other receivables
|
101
|
|
|
115
|
|
||
Accounts receivable, net(1)
|
$
|
1,427
|
|
|
$
|
1,739
|
|
Inventories, Net
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Materials and supplies inventory
|
$
|
752
|
|
|
$
|
742
|
|
Fuel inventory
|
337
|
|
|
294
|
|
||
Renewable energy certificates/emission allowance inventory, net
|
17
|
|
|
16
|
|
||
Allowance for inventory obsolescence
|
(54
|
)
|
|
(53
|
)
|
||
Inventories, net
|
$
|
1,052
|
|
|
$
|
999
|
|
|
Amounts Recognized on TVA's Consolidated Balance Sheets
At December 31, 2019
|
|
||
Assets
|
|
|
||
Operating
|
Operating lease assets, net of amortization
|
$
|
192
|
|
Finance
|
Finance leases
|
143
|
|
|
Total lease assets
|
|
$
|
335
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Accounts payable and accrued liabilities
|
$
|
72
|
|
Finance
|
Accounts payable and accrued liabilities
|
6
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease liabilities
|
130
|
|
|
Finance
|
Other long-term liabilities
|
180
|
|
|
Total lease liabilities
|
|
$
|
388
|
|
Future Minimum Lease Payments
Minimum payments due at December 31, 2019
|
|||
Operating leases
|
|
||
2020 (remaining)
|
$
|
61
|
|
2021
|
74
|
|
|
2022
|
59
|
|
|
2023
|
11
|
|
|
2024
|
2
|
|
|
Minimum annual payments
|
207
|
|
|
Less: present value discount
|
(5
|
)
|
|
Operating present value of net minimum lease payments
|
$
|
202
|
|
|
|
||
Finance leases
|
|
||
2020 (remaining)
|
$
|
40
|
|
2021
|
53
|
|
|
2022
|
53
|
|
|
2023
|
55
|
|
|
2024
|
51
|
|
|
Thereafter
|
418
|
|
|
Minimum annual payments
|
670
|
|
|
Less: amount representing interest
|
(484
|
)
|
|
Finance present value of net minimum lease payments
|
$
|
186
|
|
Future Minimum Lease Payments
Minimum payments due at September 30, 2019
|
|||
Operating leases
|
|
||
2020
|
$
|
76
|
|
2021
|
75
|
|
|
2022
|
60
|
|
|
2023
|
12
|
|
|
2024
|
3
|
|
|
Thereafter
|
2
|
|
|
Minimum annual payments
|
228
|
|
|
Less: present value discount
|
—
|
|
|
Operating present value of net minimum lease payments
|
$
|
228
|
|
|
|
||
Finance leases
|
|
||
2020
|
$
|
53
|
|
2021
|
53
|
|
|
2022
|
53
|
|
|
2023
|
55
|
|
|
2024
|
51
|
|
|
Thereafter
|
418
|
|
|
Minimum annual payments
|
683
|
|
|
Less: amount representing interest
|
(495
|
)
|
|
Finance present value of net minimum lease payments
|
$
|
188
|
|
Other Long-Term Assets
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Loans and other long-term receivables, net
|
$
|
129
|
|
|
$
|
125
|
|
EnergyRight® receivables
|
78
|
|
|
81
|
|
||
Prepaid long-term service agreements(1)
|
29
|
|
|
22
|
|
||
Restricted cash and cash equivalents
|
23
|
|
|
23
|
|
||
Prepaid capacity payments
|
17
|
|
|
19
|
|
||
Other
|
58
|
|
|
55
|
|
||
Total other long-term assets
|
$
|
334
|
|
|
$
|
325
|
|
Regulatory Assets and Liabilities(1)
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Current regulatory assets
|
|
|
|
||||
Unrealized losses on interest rate derivatives
|
$
|
89
|
|
|
$
|
89
|
|
Unrealized losses on commodity derivatives
|
49
|
|
|
39
|
|
||
Fuel cost adjustment receivable
|
21
|
|
|
28
|
|
||
Total current regulatory assets
|
159
|
|
|
156
|
|
||
|
|
|
|
||||
Non-current regulatory assets
|
|
|
|
|
|
||
Deferred pension costs and other post-retirement benefits costs
|
4,678
|
|
|
4,756
|
|
||
Non-nuclear decommissioning costs
|
1,725
|
|
|
1,741
|
|
||
Nuclear decommissioning costs
|
765
|
|
|
868
|
|
||
Unrealized losses on interest rate derivatives
|
1,074
|
|
|
1,241
|
|
||
Unrealized losses on commodity contracts
|
17
|
|
|
15
|
|
||
Other non-current regulatory assets
|
151
|
|
|
142
|
|
||
Total non-current regulatory assets
|
8,410
|
|
|
8,763
|
|
||
Total regulatory assets
|
$
|
8,569
|
|
|
$
|
8,919
|
|
|
|
|
|
||||
Current regulatory liabilities
|
|
|
|
|
|
||
Fuel cost adjustment tax equivalents
|
$
|
134
|
|
|
$
|
138
|
|
Unrealized gains on commodity derivatives
|
3
|
|
|
12
|
|
||
Total current regulatory liabilities
|
$
|
137
|
|
|
$
|
150
|
|
Summary of Impact of VIEs on Consolidated Balance Sheets
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Current liabilities
|
|
|
|
|
|||
Accrued interest
|
$
|
24
|
|
|
$
|
11
|
|
Accounts payable and accrued liabilities
|
3
|
|
|
3
|
|
||
Current maturities of long-term debt of variable interest entities
|
39
|
|
|
39
|
|
||
Total current liabilities
|
66
|
|
|
53
|
|
||
Other liabilities
|
|
|
|
||||
Other long-term liabilities
|
25
|
|
|
25
|
|
||
Long-term debt, net
|
|
|
|
||||
Long-term debt of variable interest entities, net
|
1,089
|
|
|
1,089
|
|
||
Total liabilities
|
$
|
1,180
|
|
|
$
|
1,167
|
|
Other Long-Term Liabilities
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Interest rate swap liabilities
|
$
|
1,477
|
|
|
$
|
1,676
|
|
Finance lease liabilities
|
180
|
|
|
182
|
|
||
Currency swap liabilities
|
120
|
|
|
193
|
|
||
EnergyRight® financing obligation
|
88
|
|
|
90
|
|
||
Paradise pipeline financing obligation
|
79
|
|
|
80
|
|
||
Accrued long-term service agreement
|
61
|
|
|
66
|
|
||
Other
|
196
|
|
|
203
|
|
||
Total other long-term liabilities
|
$
|
2,201
|
|
|
$
|
2,490
|
|
Debt Outstanding
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Short-term debt
|
|
|
|
||||
Short-term debt, net
|
$
|
895
|
|
|
$
|
922
|
|
Current maturities of power bonds issued at par
|
1,029
|
|
|
1,030
|
|
||
Current maturities of long-term debt of VIEs issued at par
|
39
|
|
|
39
|
|
||
Current maturities of notes payable
|
22
|
|
|
23
|
|
||
Total current debt outstanding, net
|
1,985
|
|
|
2,014
|
|
||
Long-term debt
|
|
|
|
|
|
||
Long-term power bonds(1)
|
19,065
|
|
|
19,225
|
|
||
Long-term debt of variable interest entities, net
|
1,089
|
|
|
1,089
|
|
||
Unamortized discounts, premiums, issue costs, and other
|
(124
|
)
|
|
(131
|
)
|
||
Total long-term debt, net
|
20,030
|
|
|
20,183
|
|
||
Total outstanding debt
|
$
|
22,015
|
|
|
$
|
22,197
|
|
Debt Securities Activity(1)
|
|||||||||
|
|
Date
|
|
Amount(2)
|
|
Interest Rate
|
|||
Redemptions/Maturities
|
|
|
|
|
|
|
|||
electronotes®
|
|
First Quarter 2020
|
|
$
|
217
|
|
|
3.33
|
%
|
|
|
|
|
|
|
|
|
|
|
2009 Series B
|
|
December 2019
|
|
1
|
|
|
3.77
|
%
|
|
Total redemptions/maturities of debt
|
|
|
|
$
|
218
|
|
|
|
|
Summary of Long-Term Credit Facilities
At December 31, 2019
|
||||||||||||||||
Maturity Date
|
|
Facility Limit
|
|
Letters of Credit Outstanding
|
|
Cash Borrowings
|
|
Availability
|
||||||||
December 2021
|
|
$
|
150
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
112
|
|
February 2022
|
|
500
|
|
|
500
|
|
|
—
|
|
|
—
|
|
||||
June 2023
|
|
1,000
|
|
|
342
|
|
|
—
|
|
|
658
|
|
||||
September 2023
|
|
1,000
|
|
|
310
|
|
|
—
|
|
|
690
|
|
||||
Total
|
|
$
|
2,650
|
|
|
$
|
1,190
|
|
|
$
|
—
|
|
|
$
|
1,460
|
|
Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2)(1)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income to Interest Expense |
|||||||||
|
|
Three Months Ended
December 31 |
|
||||||
Derivatives in Cash Flow Hedging Relationship
|
|
2019
|
|
2018
|
|
||||
Currency swaps
|
|
$
|
59
|
|
|
$
|
(18
|
)
|
|
Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment
Amount of Gain (Loss) Recognized in Income on Derivatives(1)
|
|||||||||||||
|
|
|
|
|
|
Three Months Ended December 31
|
|
||||||
Derivative Type
|
|
Objective of Derivative
|
|
Accounting for Derivative Instrument
|
|
2019
|
|
2018
|
|
||||
Interest rate swaps
|
|
To fix short-term debt variable rate to a fixed rate (interest rate risk)
|
|
Mark-to-Market gains and losses are recorded as regulatory assets or liabilities
Realized gains and losses are recognized in interest expense when incurred during the settlement period and are presented in operating cash flow |
|
$
|
(21
|
)
|
|
$
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity contract derivatives
|
|
To protect against fluctuations in market prices of purchased coal or natural gas (price risk)
|
|
Mark-to-market gains and losses are recorded as regulatory assets or liabilities
Realized gains and losses due to contract settlements are recognized in fuel expense as incurred
|
|
1
|
|
|
—
|
|
|
Fair Values of TVA Derivatives
|
|||||||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||||||
Derivatives That Receive Hedge Accounting Treatment:
|
|||||||||||
|
Balance
|
|
Balance Sheet Presentation
|
|
Balance
|
|
Balance Sheet Presentation
|
||||
Currency swaps
|
|
|
|
|
|
|
|
||||
£200 million Sterling
|
$
|
(69
|
)
|
|
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(64)
|
|
$
|
(90
|
)
|
|
Accounts payable and
accrued liabilities $(6); Other long-term liabilities $(84) |
£250 million Sterling
|
(27
|
)
|
|
Accounts payable and accrued liabilities $(4); Other long-term liabilities $(23)
|
|
(61
|
)
|
|
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(56)
|
||
£150 million Sterling
|
(36
|
)
|
|
Accounts payable and accrued liabilities $(3); Other long-term liabilities $(33)
|
|
(57
|
)
|
|
Accounts payable and
accrued liabilities $(4); Other long-term liabilities $(53) |
||
|
|
|
|
|
|
|
|
||||
Derivatives That Do Not Receive Hedge Accounting Treatment:
|
|||||||||||
|
Balance
|
|
Balance Sheet Presentation
|
|
Balance
|
|
Balance Sheet Presentation
|
||||
Interest rate swaps
|
|
|
|
|
|
|
|
||||
$1.0 billion notional
|
$
|
(1,124
|
)
|
|
Accounts payable and
accrued liabilities $(63); Other long-term liabilities $(1,061) |
|
$
|
(1,261
|
)
|
|
Accounts payable and
accrued liabilities $(62); Other long-term liabilities $(1,199) |
$476 million notional
|
(436
|
)
|
|
Accounts payable and
accrued liabilities $(23); Other long-term liabilities $(413) |
|
(498
|
)
|
|
Accounts payable and
accrued liabilities $(24); Other long-term liabilities $(474) |
||
$42 million notional
|
(5
|
)
|
|
Accounts payable and
accrued liabilities $(2); Other long-term liabilities $(3) |
|
(5
|
)
|
|
Accounts payable and
accrued liabilities $(2); Other long-term liabilities $(3) |
||
Commodity contract derivatives
|
(62
|
)
|
|
Other current assets $4; Accounts payable and accrued liabilities $(49); Other long-term liabilities $(17)
|
|
(41
|
)
|
|
Other current assets $12; Accounts payable and accrued liabilities $(37); Other long-term liabilities $(16)
|
Commodity Contract Derivatives
|
|||||||||||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||||||||||
|
Number of Contracts
|
|
Notional Amount
|
|
Fair Value (MtM)
|
|
Number of Contracts
|
|
Notional Amount
|
|
Fair Value (MtM)
|
||||
Coal contract derivatives
|
9
|
|
10 million tons
|
|
$
|
(16
|
)
|
|
8
|
|
9 million tons
|
|
$
|
(4
|
)
|
Natural gas contract derivatives
|
53
|
|
365 million mmBtu
|
|
$
|
(46
|
)
|
|
65
|
|
330 million mmBtu
|
|
$
|
(37
|
)
|
Derivative Assets and Liabilities(1)
|
|||||||
|
At December 31, 2019
|
|
At September 30, 2019
|
||||
Assets
|
|
|
|
||||
Commodity derivatives not subject to master netting or similar arrangement
|
$
|
4
|
|
|
$
|
12
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Currency swaps(2)
|
$
|
132
|
|
|
$
|
208
|
|
Interest rate swaps(2)
|
1,565
|
|
|
1,764
|
|
||
Total derivatives subject to master netting or similar arrangement
|
1,697
|
|
|
1,972
|
|
||
Commodity derivatives not subject to master netting or similar arrangement
|
66
|
|
|
53
|
|
||
Total liabilities
|
$
|
1,763
|
|
|
$
|
2,025
|
|
•
|
If TVA remains a majority-owned U.S. government entity but Standard & Poor's Financial Services, LLC ("S&P") or Moody's Investors Service, Inc. ("Moody's") downgrades TVA's credit rating to AA or Aa2, respectively, TVA's collateral obligations would likely increase by $22 million, and
|
•
|
If TVA ceases to be majority-owned by the U.S. government, TVA's credit rating would likely be downgraded and TVA would be required to post additional collateral.
|
Level 1
|
—
|
|
Unadjusted quoted prices in active markets accessible by the reporting entity for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing.
|
Level 2
|
—
|
|
Pricing inputs other than quoted market prices included in Level 1 that are based on observable market data and that are directly or indirectly observable for substantially the full term of the asset or liability. These include quoted market prices for similar assets or liabilities, quoted market prices for identical or similar assets in markets that are not active, adjusted quoted market prices, inputs from observable data such as interest rate and yield curves, volatilities and default rates observable at commonly quoted intervals, and inputs derived from observable market data by correlation or other means.
|
Level 3
|
—
|
|
Pricing inputs that are unobservable, or less observable, from objective sources. Unobservable inputs are only to be used to the extent observable inputs are not available. These inputs maintain the concept of an exit price from the perspective of a market participant and should reflect assumptions of other market participants. An entity should consider all market participant assumptions that are available without unreasonable cost and effort. These are given the lowest priority and are generally used in internally developed methodologies to generate management's best estimate of the fair value when no observable market data is available.
|
Fair Value Measurements
At December 31, 2019 |
|||||||||||||||
|
Quoted Prices in Active
Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
509
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
509
|
|
Government debt securities
|
278
|
|
|
78
|
|
|
—
|
|
|
356
|
|
||||
Corporate debt securities
|
—
|
|
|
423
|
|
|
—
|
|
|
423
|
|
||||
Mortgage and asset-backed securities
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||
Institutional mutual funds
|
266
|
|
|
—
|
|
|
—
|
|
|
266
|
|
||||
Forward debt securities contracts
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Private credit funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
||||
Private equity funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
158
|
|
||||
Private real asset funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
142
|
|
||||
Commingled funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,225
|
|
||||
Total investments
|
1,053
|
|
|
533
|
|
|
—
|
|
|
3,163
|
|
||||
Commodity contract derivatives
|
—
|
|
|
3
|
|
|
1
|
|
|
4
|
|
||||
Total
|
$
|
1,053
|
|
|
$
|
536
|
|
|
$
|
1
|
|
|
$
|
3,167
|
|
|
|
|
|
|
|
|
|
||||||||
|
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Currency swaps(2)
|
$
|
—
|
|
|
$
|
132
|
|
|
$
|
—
|
|
|
$
|
132
|
|
Interest rate swaps
|
—
|
|
|
1,565
|
|
|
—
|
|
|
1,565
|
|
||||
Commodity contract derivatives
|
—
|
|
|
48
|
|
|
18
|
|
|
66
|
|
||||
Total
|
$
|
—
|
|
|
$
|
1,745
|
|
|
$
|
18
|
|
|
$
|
1,763
|
|
Fair Value Measurements
At September 30, 2019 |
|||||||||||||||
|
Quoted Prices in Active
Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Investments
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
464
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
464
|
|
Government debt securities
|
279
|
|
|
65
|
|
|
—
|
|
|
344
|
|
||||
Corporate debt securities
|
—
|
|
|
417
|
|
|
—
|
|
|
417
|
|
||||
Mortgage and asset-backed securities
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||
Institutional mutual funds
|
250
|
|
|
—
|
|
|
—
|
|
|
250
|
|
||||
Forward debt securities contracts
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||
Private equity funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
140
|
|
||||
Private real estate funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
135
|
|
||||
Private credit measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Commingled funds measured at net asset value(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,131
|
|
||||
Total investments
|
993
|
|
|
536
|
|
|
—
|
|
|
2,968
|
|
||||
Commodity contract derivatives
|
—
|
|
|
7
|
|
|
5
|
|
|
12
|
|
||||
Total
|
$
|
993
|
|
|
$
|
543
|
|
|
$
|
5
|
|
|
$
|
2,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Quoted Prices in Active Markets for Identical Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Currency swaps(2)
|
$
|
—
|
|
|
$
|
208
|
|
|
$
|
—
|
|
|
$
|
208
|
|
Interest rate swaps
|
—
|
|
|
1,764
|
|
|
—
|
|
|
1,764
|
|
||||
Commodity contract derivatives
|
—
|
|
|
44
|
|
|
9
|
|
|
53
|
|
||||
Total
|
$
|
—
|
|
|
$
|
2,016
|
|
|
$
|
9
|
|
|
$
|
2,025
|
|
Estimated Values of Financial Instruments Not Recorded at Fair Value
|
|||||||||||||||||
|
|
|
At December 31, 2019
|
|
At September 30, 2019
|
||||||||||||
|
Valuation Classification
|
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount |
|
Fair
Value |
||||||||
EnergyRight® receivables (including current portion)
|
Level 2
|
|
$
|
98
|
|
|
$
|
97
|
|
|
$
|
101
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loans and other long-term receivables, net (including current portion)
|
Level 2
|
|
135
|
|
|
124
|
|
|
131
|
|
|
120
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
EnergyRight® financing obligation (including current portion)
|
Level 2
|
|
110
|
|
|
122
|
|
|
113
|
|
|
126
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Unfunded loan commitments
|
Level 2
|
|
—
|
|
|
8
|
|
|
—
|
|
|
10
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Membership interests of VIEs subject to mandatory redemption (including current portion)
|
Level 2
|
|
28
|
|
|
36
|
|
|
28
|
|
|
37
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term outstanding power bonds (including current maturities), net
|
Level 2
|
|
19,970
|
|
|
25,152
|
|
|
20,124
|
|
|
26,059
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt of VIEs (including current maturities), net
|
Level 2
|
|
1,128
|
|
|
1,360
|
|
|
1,128
|
|
|
1,371
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term notes payable (including current maturities)
|
Level 2
|
|
22
|
|
|
22
|
|
|
23
|
|
|
23
|
|
Operating Revenues By State
Three Months Ended December 31
(in millions)
|
|||||||
|
2019
|
|
2018
|
||||
Alabama
|
$
|
369
|
|
|
$
|
392
|
|
Georgia
|
63
|
|
|
67
|
|
||
Kentucky
|
157
|
|
|
168
|
|
||
Mississippi
|
237
|
|
|
251
|
|
||
North Carolina
|
18
|
|
|
20
|
|
||
Tennessee
|
1,676
|
|
|
1,771
|
|
||
Virginia
|
11
|
|
|
12
|
|
||
Subtotal
|
2,531
|
|
|
2,681
|
|
||
Off-system sales
|
1
|
|
|
—
|
|
||
Revenue from sales of electricity
|
2,532
|
|
|
2,681
|
|
||
Other revenue
|
46
|
|
|
44
|
|
||
Total operating revenues
|
$
|
2,578
|
|
|
$
|
2,725
|
|
TVA Local Power Company Contracts
At and for the Three Months Ended December 31, 2019 |
||||||||||
Contract Arrangements(1)
|
|
Number of LPCs
|
|
Revenue from Sales of Electricity to LPCs
(in millions) |
|
Percentage of Total Operating Revenues
|
||||
20-year termination notice
|
|
134
|
|
|
$
|
1,471
|
|
|
57.1
|
%
|
10-year termination notice
|
|
4
|
|
|
214
|
|
|
8.3
|
|
|
5-year termination notice
|
|
16
|
|
|
672
|
|
|
26.1
|
|
|
Total
|
|
154
|
|
|
$
|
2,357
|
|
|
91.5
|
%
|
Components of TVA's Benefit Plans(1)
|
|||||||||||||||
|
For the Three Months Ended
December 31 |
||||||||||||||
|
Pension Benefits
|
|
Other Post-Retirement Benefits
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
12
|
|
|
$
|
12
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Interest cost
|
104
|
|
|
123
|
|
|
4
|
|
|
4
|
|
||||
Expected return on plan assets
|
(122
|
)
|
|
(119
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(24
|
)
|
|
(25
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
Recognized net actuarial loss
|
109
|
|
|
82
|
|
|
2
|
|
|
1
|
|
||||
Total net periodic benefit cost as actuarially determined
|
79
|
|
|
73
|
|
|
4
|
|
|
2
|
|
||||
Amount expensed (capitalized) due to actions of regulator
|
(2
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Total net periodic benefit cost
|
$
|
77
|
|
|
$
|
76
|
|
|
$
|
4
|
|
|
$
|
2
|
|
•
|
The primary level is private insurance underwritten by American Nuclear Insurers ("ANI") and provides public liability insurance coverage of $450 million for each nuclear power plant licensed to operate. If this amount is not sufficient to cover claims arising from a nuclear incident, the second level, Secondary Financial Protection, applies.
|
•
|
Within the Secondary Financial Protection level, the licensee of each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident of fault, up to a maximum of approximately $138 million per reactor per incident. 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. Currently, 98 reactors are participating in the Secondary Financial Protection program.
|
|
Sales of Electricity
|
|
Three Months Ended December 31
|
||
|
(millions of kWh)
|
|
|
Degree Days
|
|
|
|||||||||||||||||
|
Variation from Normal
|
|
Variation from Prior Period
|
|||||||||||||||||
|
2019
|
|
Normal
|
|
Percent Variation
|
|
2018(1)
|
|
Normal
|
|
Percent Variation
|
|
Percent Change
|
|||||||
Heating Degree Days
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended December 31
|
1,278
|
|
|
1,289
|
|
|
(0.9
|
)%
|
|
1,385
|
|
|
1,289
|
|
|
7.4
|
%
|
|
(7.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cooling Degree Days
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended December 31
|
90
|
|
|
43
|
|
|
109.3
|
%
|
|
115
|
|
|
43
|
|
|
167.4
|
%
|
|
(21.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Degree Days
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended December 31
|
1,368
|
|
|
1,332
|
|
|
2.7
|
%
|
|
1,500
|
|
|
1,332
|
|
|
12.6
|
%
|
|
(8.8
|
)%
|
Summary Consolidated Statements of Operations
|
||||||||||
|
Three Months Ended December 31
|
|||||||||
|
2019
|
|
2018
|
|
Percent Change
|
|||||
Operating revenues
|
$
|
2,578
|
|
|
$
|
2,725
|
|
|
(5.4
|
)%
|
Operating expenses
|
2,046
|
|
|
1,960
|
|
|
4.4
|
%
|
||
Operating income
|
532
|
|
|
765
|
|
|
(30.5
|
)%
|
||
Other income (expense), net
|
12
|
|
|
24
|
|
|
(50.0
|
)%
|
||
Other net periodic benefit cost
|
65
|
|
|
64
|
|
|
1.6
|
%
|
||
Interest expense
|
287
|
|
|
302
|
|
|
(5.0
|
)%
|
||
Net income (loss)
|
$
|
192
|
|
|
$
|
423
|
|
|
(54.6
|
)%
|
|
Operating Revenues
|
|
Three Months Ended December 31
|
Changes in Revenue Components
|
|||||||||||
|
Three Months Ended December 31
|
||||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Base revenue
|
|
|
|
|
|
|
|||||
Energy revenue
|
$
|
1,067
|
|
|
$
|
1,190
|
|
|
$
|
(123
|
)
|
Demand revenue
|
883
|
|
|
858
|
|
|
25
|
|
|||
Grid access charge
|
149
|
|
|
64
|
|
|
85
|
|
|||
Long-term partnership agreement credits for LPCs
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|||
Other charges and credits(1)
|
(144
|
)
|
|
(138
|
)
|
|
(6
|
)
|
|||
Total base revenue
|
1,921
|
|
|
1,974
|
|
|
(53
|
)
|
|||
Fuel cost recovery
|
610
|
|
|
707
|
|
|
(97
|
)
|
|||
Off-system sales
|
1
|
|
|
—
|
|
|
1
|
|
|||
Revenue from sales of electricity
|
2,532
|
|
|
2,681
|
|
|
(149
|
)
|
|||
Other revenue
|
46
|
|
|
44
|
|
|
2
|
|
|||
Total operating revenues
|
$
|
2,578
|
|
|
$
|
2,725
|
|
|
$
|
(147
|
)
|
Power Supply from TVA-Operated Generation Facilities and Purchased Power
|
||||||||||||||||||
|
|
Three Months Ended December 31
|
|
|
|
|
||||||||||||
|
|
2019
|
|
2018
|
|
|
|
|
||||||||||
|
|
kWh
(millions)
|
|
Percent of Power Supply
|
|
kWh
(millions) |
|
Percent of Power Supply
|
|
Change
|
|
Percentage Change
|
||||||
Coal-fired
|
|
5,170
|
|
|
14
|
%
|
|
6,480
|
|
|
17
|
%
|
|
(1,310
|
)
|
|
(20
|
)%
|
Nuclear
|
|
15,716
|
|
|
42
|
%
|
|
13,810
|
|
|
36
|
%
|
|
1,906
|
|
|
14
|
%
|
Hydroelectric
|
|
3,655
|
|
|
10
|
%
|
|
4,809
|
|
|
12
|
%
|
|
(1,154
|
)
|
|
(24
|
)%
|
Natural gas and/or oil-fired
|
|
7,855
|
|
|
21
|
%
|
|
6,611
|
|
|
17
|
%
|
|
1,244
|
|
|
19
|
%
|
Total TVA-operated generation facilities(1)
|
|
32,396
|
|
|
87
|
%
|
|
31,710
|
|
|
82
|
%
|
|
686
|
|
|
2
|
%
|
Purchased power (non-renewable)(2)
|
|
2,954
|
|
|
8
|
%
|
|
5,018
|
|
|
13
|
%
|
|
(2,064
|
)
|
|
(41
|
)%
|
Purchased power (renewable)(3)
|
|
1,950
|
|
|
5
|
%
|
|
1,909
|
|
|
5
|
%
|
|
41
|
|
|
2
|
%
|
Total purchased power
|
|
4,904
|
|
|
13
|
%
|
|
6,927
|
|
|
18
|
%
|
|
(2,023
|
)
|
|
(29
|
)%
|
Total power supply
|
|
37,300
|
|
|
100
|
%
|
|
38,637
|
|
|
100
|
%
|
|
(1,337
|
)
|
|
(3
|
)%
|
Fuel
|
Fuel expense decreased $18 million for the three months ended December 31, 2019, as compared to the same period of the prior year. Lower effective fuel rates contributed $58 million to the decrease resulting from lower commodity prices, particularly the prices of gas. Partially offsetting this decrease was an increase to fuel volume of $10 million due to an increase of TVA owned generation and an increase of $30 million driven by variances in fuel rate recovery resulting from the increase in lower cost TVA-owned generation.
|
Purchased Power
|
Purchased power expense decreased $78 million for the three months ended December 31, 2019, as compared to the same period of the prior year. This was primarily driven by a $93 million reduction in volume due to less TVA-owned facilities in outages during the three months ended December 31, 2019, as well as a decrease in total degree days. Partially offsetting these decreases was an increase of $21 million in fuel rate recovery driven by an increase in lower cost TVA-owned generation.
|
Operating and Maintenance
|
Operating and maintenance expense decreased $56 million for the three months ended December 31, 2019, as compared to the same period of the prior year. This was primarily driven by $65 million of prior year accelerated recovery of the regulatory asset for Environmental cleanup costs related to the Kingston ash spill, which was fully amortized at September 30, 2019. Additionally, there were less planned nuclear outage days which decreased outage expense by $24 million. Partially offsetting these decreases was an increase of $15 million related to TVA's capital spare program, $4 million of project write-offs associated with the retirement of Paradise Unit 3, and $16 million of increased payroll and benefit costs due to labor escalation for cost of living increases and timing of accruals.
|
Depreciation and Amortization
|
Depreciation and amortization expense increased $239 million for the three months ended December 31, 2019, as compared to the same period of the prior year. This was primarily driven by an increase in depreciation expense of $225 million related to the decision in the second quarter of 2019 to accelerate the retirements of Bull Run and Paradise. The remaining variance is primarily due to new additions to Completed plant.
|
Tax Equivalents
|
Tax equivalents expense decreased $1 million for the three months ended December 31, 2019, as compared to the same period of the prior year. The expense is comparable to the prior period as expected due to TVA's total operating revenues being consistent from 2018 to 2019.
|
Short-Term Borrowing Table
|
||||||||||||||||
|
At
December 31, 2019 |
|
Three Months
Ended December 31, 2019 |
|
|
At
December 31, 2018 |
|
Three Months
Ended December 31, 2018 |
||||||||
Gross Amount Outstanding (at End of Period) or Average Gross Amount Outstanding (During Period)
|
|
|
|
|
|
|
|
|
||||||||
Discount Notes
|
$
|
895
|
|
|
$
|
767
|
|
|
|
$
|
2,335
|
|
|
$
|
1,999
|
|
Maximum Month-End Gross Amount Outstanding (During Period)
|
|
|
|
|
|
|
|
|
||||||||
Discount Notes
|
N/A
|
|
|
895
|
|
|
|
N/A
|
|
|
2,390
|
|
||||
Weighted Average Interest Rate
|
|
|
|
|
|
|
|
|
||||||||
Discount Notes
|
1.560
|
%
|
|
1.710
|
%
|
|
|
2.338
|
%
|
|
2.270
|
%
|
Estimated Potential Environmental Expenditures(1)(2)
At December 31, 2019
(in millions)
|
|||||||||||||||
|
Remaining 2020
|
|
2021
|
|
Thereafter(3)(4)
|
|
Total
|
||||||||
Coal combustion residuals conversion program(5)
|
$
|
225
|
|
|
$
|
290
|
|
|
$
|
602
|
|
|
$
|
1,117
|
|
Clean air control projects(6)
|
14
|
|
|
37
|
|
|
81
|
|
|
132
|
|
||||
Clean Water Act requirements(7)
|
67
|
|
|
74
|
|
|
120
|
|
|
261
|
|
Date:
|
February 4, 2020
|
|
TENNESSEE VALLEY AUTHORITY
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jeffrey J. Lyash
|
|
|
|
Jeffrey J. Lyash
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
By:
|
/s/ John M. Thomas, III
|
|
|
|
John M. Thomas, III
|
|
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
1 Year Tennessee Valley Authority Chart |
1 Month Tennessee Valley Authority Chart |
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