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x
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ANNUAL REPORT PURSUANT TO SECTION 13, 15(d), OR 37 OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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
(IRS 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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Table of Contents
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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. BUSINESS......................................................................................................................................................................................................................................
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The Corporation
.................................................................................................................................................................................................................................
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Service Area
.......................................................................................................................................................................................................................................
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Customers
..........................................................................................................................................................................................................................................
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Rates
..................................................................................................................................................................................................................................................
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Current Power Supply
.........................................................................................................................................................................................................................
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Future Power Supply
..........................................................................................................................................................................................................................
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Fuel Supply
.........................................................................................................................................................................................................................................
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Transmission
......................................................................................................................................................................................................................................
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Weather and Seasonality
....................................................................................................................................................................................................................
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Competition
........................................................................................................................................................................................................................................
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Research and Development
...............................................................................................................................................................................................................
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Environmental Stewardship Activities
.................................................................................................................................................................................................
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Economic Development Activities
......................................................................................................................................................................................................
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Governance
........................................................................................................................................................................................................................................
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Regulation
..........................................................................................................................................................................................................................................
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Taxation and Tax Equivalents
.............................................................................................................................................................................................................
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Environmental Matters
.......................................................................................................................................................................................................................
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Employees
..........................................................................................................................................................................................................................................
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ITEM 1A. RISK FACTORS
............................................................................................................................................................................................................................
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ITEM 1B. UNRESOLVED STAFF COMMENTS
............................................................................................................................................................................................
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ITEM 2. PROPERTIES
..................................................................................................................................................................................................................................
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Generating Properties
........................................................................................................................................................................................................................
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Transmission Properties
.....................................................................................................................................................................................................................
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Natural Resource Stewardship Properties
.........................................................................................................................................................................................
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Buildings
.............................................................................................................................................................................................................................................
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Disposal of Property
...........................................................................................................................................................................................................................
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ITEM 3. LEGAL PROCEEDINGS
..................................................................................................................................................................................................................
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ITEM 4. REMO
VED AND RESERVED.........................................................................................................................................................................................................
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ITEM 6. SELECTED FINANCIAL DATA
........................................................................................................................................................................................................
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
...................................................................
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Business Overview
.............................................................................................................................................................................................................................
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Executive Summary
............................................................................................................................................................................................................................
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2011 Highlights
...................................................................................................................................................................................................................................
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2011 Challenges
.................................................................................................................................................................................................................................
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Future Challenges
..............................................................................................................................................................................................................................
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Liquidity and Capital Resources
.........................................................................................................................................................................................................
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Results of Operations
.........................................................................................................................................................................................................................
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Off-Balance Sheet Arrangements
.......................................................................................................................................................................................................
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Critical Accounting Policies and Estimates
.........................................................................................................................................................................................
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Fair Value Measurements
...................................................................................................................................................................................................................
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New Accounting Standards and Interpretations
.................................................................................................................................................................................
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Legislative and Regulatory Matters
....................................................................................................................................................................................................
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Environmental Matters
.......................................................................................................................................................................................................................
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Legal Proceedings
..............................................................................................................................................................................................................................
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Risk Management Activities
...............................................................................................................................................................................................................
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Subsequent Event
s............................................................................................................................................................................................................................
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
...........................................................................................................................
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
..........................................................................................................................................................
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Statements of Operations
...................................................................................................................................................................................................................
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Balance Sheets
..................................................................................................................................................................................................................................
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Statements of Cash Flows
.................................................................................................................................................................................................................
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Statements of Changes in Proprietary Capital
...................................................................................................................................................................................
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Notes to Financial Statements
...........................................................................................................................................................................................................
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Report of Independent Registered Public Accounting Firm
................................................................................................................................................................
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
................................................................
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ITEM 9A. CONTROLS AND PROCEDURES
...............................................................................................................................................................................................
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Disclosure Controls and Procedures
..................................................................................................................................................................................................
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Internal Control over Financial Reporting
...........................................................................................................................................................................................
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Report of Independent Registered Public Accounting Firm
................................................................................................................................................................
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ITEM 9B. OTHER INFORMATION
................................................................................................................................................................................................................
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
.............................................................................................................................
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Directors
..............................................................................................................................................................................................................................................
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Executive Officers
...............................................................................................................................................................................................................................
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Disclosure and Financial Code of Ethics
.............................................................................................................................................................................................
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Committees of the TVA Board
.............................................................................................................................................................................................................
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ITEM 11. EXECUTIVE COMPENSATION
.....................................................................................................................................................................................................
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Compensation Discussion and Analysis
..............................................................................................................................................................................................
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Executive Compensation Tables and Narrative Disclosures
...............................................................................................................................................................
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Retirement and Pension Plans
............................................................................................................................................................................................................
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Potential Payments on Account of Retirement/Resignation, Termination without Cause, Termination with Cause, or Death/Disability
.............................................
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Other Agreements
...............................................................................................................................................................................................................................
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Director Compensation
........................................................................................................................................................................................................................
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Compensation Committee Interlocks and Insider Participation
...........................................................................................................................................................
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Compensation Committee Report
.......................................................................................................................................................................................................
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
......................................
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
.........................................................................................
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Director Independence
........................................................................................................................................................................................................................
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Related Party Transactions
.................................................................................................................................................................................................................
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
......................................................................................................................................................................
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
.....................................................................................................................................................................
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SIGNATURES
................................................................................................................................................................................................................................................
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EXHIBIT INDEX
.............................................................................................................................................................................................................................................
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GLOSSARY OF COMMON ACRONYMS
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Following are definitions of terms or acronyms frequently used in this Annual Report on Form 10-K for the fiscal year ended September 30, 2011 (the “Annual Report”):
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Term or Acronym
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Definition
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AFUDC
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Allowance for funds used during construction
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ARO
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Asset retirement obligation
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ARP
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Acid Rain Program
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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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BEST
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Bellefonte Efficiency and Sustainability Team
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BREDL
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Blue Ridge Environmental Defense League
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CAA
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Clean Air Act
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CCOLA
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Combined construction and operating license application
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CCP
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Coal combustion products
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CCR
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Coal combustion residual
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CERCLA
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Comprehensive Environmental Response, Compensation, and Liability Act
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CME
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Chicago Mercantile Exchange
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CO
2
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Carbon dioxide
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COLA
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Cost of living adjustment
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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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EPA
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Environmental Protection Agency
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FASB
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Financial Accounting Standards Board
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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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IRP
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Integrated Resource Plan
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KDAQ
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Kentucky Division for Air Quality
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kWh
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Kilowatt-hour(s)
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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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Megawatt
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NAAQS
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National Ambient Air Quality Standards
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NDT
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Nuclear decommissioning trust
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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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NO
x
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Nitrogen oxides
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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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NRP
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Natural Resource Plan
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NSR
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New Source Review
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PSD
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Prevention of Significant Deterioration
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QSPE
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Qualifying special-purpose entity
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REIT
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Real estate investment trust
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SACE
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Southern Alliance for Clean Energy
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SCRs
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Selective catalytic reduction systems
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SDE
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Seasonal demand and energy
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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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Seven States
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Seven States Power Corporation
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SO
2
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Sulfur dioxide
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SSSL
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Seven States Southaven, LLC
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TDEC
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Tennessee Department of Environment and Conservation
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TOU
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Time-of-use
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TVARS
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Tennessee Valley Authority Retirement System
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VIE
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Variable interest entity
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•
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New or changed laws, regulations, and administrative orders, including those related to environmental matters, and the costs of complying with these new or changed laws, regulations, and administrative orders, as well as complying with existing laws, regulations, and administrative orders;
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•
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The requirement or decision to make additional contributions to TVA’s pension or other post-retirement benefit plans or to TVA’s nuclear decommissioning trust (“NDT”);
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•
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Events at a TVA nuclear 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;
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•
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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, operation, and 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, negatively affect the cost and schedule for completing Watts Bar Nuclear Plant (“Watts Bar”) Unit 2 and Bellefonte Nuclear Plant (“Bellefonte”) Unit 1, and cause TVA to forego future construction at these or other facilities;
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•
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Significant delays, cost increases, or cost overruns associated with the construction of generation or transmission assets;
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•
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Fines, penalties, natural resource damages, and settlements associated with the Kingston Fossil Plant ("Kingston") ash spill;
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•
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The outcome of legal and administrative proceedings;
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•
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Significant changes in demand for electricity;
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•
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Addition or loss of customers;
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•
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The continued operation, performance, or failure of TVA’s generation, transmission, and related assets, including coal combustion residual (“CCR”) facilities;
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•
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The economics of modernizing aging coal-fired generating units and installing emission control equipment to meet anticipated emission reduction requirements, which could make continued operation of certain coal-fired units uneconomical and lead to more than anticipated removals of such units from service, perhaps permanently;
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•
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Disruption of fuel supplies, which may result from, among other things, weather conditions, production or transportation difficulties, labor challenges, or environmental laws or regulations affecting TVA’s fuel suppliers or transporters;
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•
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Purchased power price volatility and disruption of purchased power supplies;
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•
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Events 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, as well as inadequacies in the supply of water to TVA’s generation facilities;
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•
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Inability to obtain regulatory approval for the construction or operation of assets;
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•
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Weather conditions;
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•
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Catastrophic events such as fires, earthquakes, solar events, floods, hurricanes, tornadoes, pandemics, wars, national emergencies, terrorist activities, and other similar events, especially if these events occur in or near TVA’s service area;
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•
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Restrictions on TVA's ability to manage real property currently under its control;
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•
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Reliability and creditworthiness of counterparties;
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•
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Changes in the market price of commodities such as coal, uranium, natural gas, fuel oil, crude oil, construction materials, reagents, electricity, and emission allowances;
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•
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Changes in the market price of equity securities, debt securities, and other investments;
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•
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Changes in interest rates, currency exchange rates, and inflation rates;
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•
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Rising pension and health care costs;
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•
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Increases in TVA’s financial liability for decommissioning its nuclear facilities and retiring other assets;
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•
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Limitations on TVA’s ability to borrow money which may result from, among other things, TVA’s approaching or reaching its debt ceiling and changes in TVA’s borrowing authority;
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•
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An increase in TVA’s cost of capital which 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, and an increased reliance by TVA on alternative financing arrangements as TVA approaches its debt ceiling;
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•
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Changes in the economy and volatility in financial markets;
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•
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Inability to eliminate identified deficiencies in TVA’s systems, standards, controls, and corporate culture;
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•
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Ineffectiveness of TVA’s disclosure controls and procedures and its internal control over financial reporting;
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•
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Problems attracting and retaining a qualified workforce;
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•
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Changes in technology;
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•
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Failure of TVA’s information technology assets to operate as planned and the failure of TVA’s cyber security program to protect TVA’s information technology assets from cyber attacks;
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•
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Differences between estimates of revenues and expenses and actual revenues and expenses incurred; and
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•
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Unforeseeable events.
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•
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Contracts that require five years’ notice to terminate;
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•
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Contracts that require 10 years’ notice to terminate; and
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•
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Contracts that require 15 years’ notice to terminate.
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•
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Operation, maintenance, and administration of its power system;
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•
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Payments to states and counties in lieu of taxes (“tax equivalents”);
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•
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Debt service on outstanding indebtedness;
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•
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Payments to the U.S. Treasury in repayment of and as a return on the government’s appropriation investment in TVA’s power facilities (the “Power Program Appropriation Investment”); and
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•
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Such additional margin as the TVA Board may consider desirable for investment in power system assets, retirement of outstanding bonds, notes, or other evidences of indebtedness (“Bonds”) in advance of maturity, additional reduction of the Power Program Appropriation Investment, and other purposes connected with TVA’s power business.
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•
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Operating and maintenance costs;
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•
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Tax equivalents (other than the amount attributable to fuel cost-related revenues);
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•
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Other costs in accordance with the TVA Act; and
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•
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Debt service coverage.
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SUMMER NET CAPABILITY
(1)
At September 30, 2011
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Source of Capability
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Location
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Number
of Units
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Summer Net Capability (MW)
|
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Date First Unit Placed in Service
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Date Last Unit Placed in Service
|
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TVA-Operated Generating Facilities
|
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|
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|
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|
|
|
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Coal-Fired
|
|
|
|
|
|
|
|
|
|
||
Allen
(2)
|
Tennessee
|
|
3
|
|
|
702
|
|
|
1959
|
|
1959
|
Bull Run
|
Tennessee
|
|
1
|
|
|
870
|
|
|
1967
|
|
1967
|
Colbert
|
Alabama
|
|
5
|
|
|
1,184
|
|
|
1955
|
|
1965
|
Cumberland
|
Tennessee
|
|
2
|
|
|
2,386
|
|
|
1973
|
|
1973
|
Gallatin
|
Tennessee
|
|
4
|
|
|
976
|
|
|
1956
|
|
1959
|
John Sevier
(3)
|
Tennessee
|
|
4
|
|
|
704
|
|
|
1955
|
|
1957
|
Johnsonville
(3)
|
Tennessee
|
|
10
|
|
|
1,206
|
|
|
1951
|
|
1959
|
Kingston
|
Tennessee
|
|
9
|
|
|
1,398
|
|
|
1954
|
|
1955
|
Paradise
|
Kentucky
|
|
3
|
|
|
2,201
|
|
|
1963
|
|
1970
|
Shawnee
(3)
|
Kentucky
|
|
9
|
|
|
1,206
|
|
|
1953
|
|
1955
|
Widows Creek
(3)
|
Alabama
|
|
3
|
|
|
974
|
|
|
1954
|
|
1965
|
Total Coal-Fired
|
|
|
53
|
|
|
13,807
|
|
|
|
|
|
Nuclear
|
|
|
|
|
|
|
|
|
|
|
|
Browns Ferry
|
Alabama
|
|
3
|
|
|
3,300
|
|
|
1974
|
|
1977
|
Sequoyah
|
Tennessee
|
|
2
|
|
|
2,282
|
|
|
1981
|
|
1982
|
Watts Bar
|
Tennessee
|
|
1
|
|
|
1,109
|
|
|
1996
|
|
1996
|
Total Nuclear
|
|
|
6
|
|
|
6,691
|
|
|
|
|
|
Hydroelectric
|
|
|
|
|
|
|
|
|
|
|
|
Conventional Plants
|
Alabama
|
|
36
|
|
|
1,188
|
|
|
1925
|
|
1962
|
|
Georgia
|
|
2
|
|
|
35
|
|
|
1931
|
|
1956
|
|
Kentucky
|
|
5
|
|
|
223
|
|
|
1944
|
|
1948
|
|
North Carolina
|
|
6
|
|
|
492
|
|
|
1940
|
|
1956
|
|
Tennessee
|
|
60
|
|
|
1,889
|
|
|
1912
|
|
1972
|
Pumped Storage
|
Tennessee
|
|
4
|
|
|
1,616
|
|
|
1978
|
|
1979
|
Total Hydroelectric
|
|
|
113
|
|
|
5,443
|
|
|
|
|
|
Natural Gas and/or Oil-Fired
(4)
|
|
|
|
|
|
|
|
|
|
|
|
Simple Cycle Combustion Turbine
|
|
|
|
|
|
|
|
|
|
||
Allen
|
Tennessee
|
|
20
|
|
|
456
|
|
|
1971
|
|
1972
|
Brownsville
|
Tennessee
|
|
4
|
|
|
468
|
|
|
1999
|
|
1999
|
Colbert
|
Alabama
|
|
8
|
|
|
392
|
|
|
1972
|
|
1972
|
Gallatin
|
Tennessee
|
|
8
|
|
|
600
|
|
|
1975
|
|
2000
|
Gleason
|
Tennessee
|
|
3
|
|
|
360
|
|
|
2000
|
|
2000
|
Johnsonville
|
Tennessee
|
|
20
|
|
|
1,128
|
|
|
1975
|
|
2000
|
Kemper
|
Mississippi
|
|
4
|
|
|
312
|
|
|
2002
|
|
2002
|
Lagoon Creek
|
Tennessee
|
|
12
|
|
|
904
|
|
|
2001
|
|
2002
|
Marshall County
|
Kentucky
|
|
8
|
|
|
616
|
|
|
2002
|
|
2002
|
Subtotal Simple Cycle Combustion Turbine
|
|
|
87
|
|
|
5,236
|
|
|
|
|
|
Combined Cycle Combustion Turbine
|
|
|
|
|
|
|
|
|
|
||
Caledonia
|
Mississippi
|
|
3
|
|
|
765
|
|
|
2003
|
|
2003
|
Lagoon Creek
|
Tennessee
|
|
2
|
|
|
540
|
|
|
2010
|
|
2010
|
Magnolia
|
Mississippi
|
|
3
|
|
|
909
|
|
|
2003
|
|
2003
|
Southaven
|
Mississippi
|
|
3
|
|
|
774
|
|
|
2003
|
|
2003
|
Subtotal Combined Cycle Combustion Turbine
|
|
|
11
|
|
|
2,988
|
|
|
|
|
|
Total Natural Gas and/or Oil-Fired
|
|
|
98
|
|
|
8,224
|
|
|
|
|
|
Diesel Generator
|
|
|
|
|
|
|
|
|
|
|
|
Meridian
|
Mississippi
|
|
5
|
|
|
9
|
|
|
1998
|
|
1998
|
Albertville
|
Alabama
|
|
4
|
|
|
4
|
|
|
2000
|
|
2000
|
TVA Nuclear Power
At September 30, 2011
|
|||||||||
Nuclear Unit
|
Status
|
|
Nameplate Capacity (MW)
|
|
Net Capacity
Factor for
2011
|
|
Date of Expiration
of Operating
License
|
|
Date of Expiration of Construction Permits
|
Sequoyah Unit 1
|
Operating
|
|
1,221
|
|
81.1
|
|
2020
|
|
—
|
Sequoyah Unit 2
|
Operating
|
|
1,221
|
|
86.8
|
|
2021
|
|
—
|
Browns Ferry Unit 1
|
Operating
|
|
1,150
|
|
80.5
|
|
2033
|
|
—
|
Browns Ferry Unit 2
|
Operating
|
|
1,190
|
|
77.7
|
|
2034
|
|
—
|
Browns Ferry Unit 3
|
Operating
|
|
1,190
|
|
83.7
|
|
2036
|
|
—
|
Watts Bar Unit 1
|
Operating
|
|
1,230
|
|
80.9
|
|
2035
|
|
—
|
Watts Bar Unit 2
|
Under construction
|
|
1,220
|
|
—
|
|
—
|
|
2013
|
•
|
38 percent from the Illinois Basin;
|
•
|
33 percent from the Powder River Basin in Wyoming;
|
•
|
18 percent from the Uinta Basin of Utah and Colorado; and
|
•
|
11 percent from the Appalachian Basin of Kentucky, Pennsylvania, Tennessee, Virginia, and West Virginia.
|
|
2011
|
|
Percent Change
|
|
2010
|
|
Percent Change
|
|
2009
|
|||||
Combined degree days
(normal 5,223)
|
5,541
|
|
|
(8.2
|
)%
|
|
6,036
|
|
|
15.9
|
%
|
|
5,209
|
|
•
|
Development of roadmaps for technologies, including smart grid for transmission, SMRs, and strategic transportation electrification;
|
•
|
Development and testing of infrastructure and technologies to enable consumer awareness and access to demand response and energy efficiency tools;
|
•
|
Development and demonstration of coal ash utilization technologies;
|
•
|
Evaluation, demonstration, and implementation of clean and renewable energy technologies that reduce TVA's environmental footprint, including participation in technology evaluations for carbon capture and sequestration and biomass conversion;
|
•
|
Evaluation, demonstration, and implementation of technologies that improve the operational efficiency and extend asset life of TVA's generation fleet (fossil, nuclear, and hydroelectric);
|
•
|
Demonstration of Smartwires technology to enable control of individual transmission line power flow;
|
•
|
Establishment of an integrated carbon sequestration and environmental stewardship pilot project to provide education about carbon cycle, carbon sequestration, and carbon offsets, bioenergy, and TVA's reforestation and environmental stewardship activities; and
|
•
|
Development of techniques to secure critical cyber transmission assets.
|
•
|
Under section 210 of the FPA, TVA can be ordered to interconnect its transmission facilities with the electrical facilities of qualified generators and other electric utilities that meet certain requirements. It must be found that the requested interconnection is in the public interest and would encourage conservation of energy or capital, optimize efficiency of facilities or resources, or improve reliability. The requirements of section 212 concerning the terms and conditions of interconnection, including reimbursement of costs, must also be met.
|
•
|
Under section 211 of the FPA, TVA can be ordered to transmit power at wholesale rates provided that the order (1) does not impair the reliability of the TVA or surrounding systems and (2) meets the applicable requirements of section 212 concerning terms, conditions, and rates for service. Under section 211A of the FPA, TVA is subject to FERC review of the transmission rates and the terms and conditions of service that TVA provides others to ensure comparability of treatment of such service with TVA’s own use of its transmission system and that the terms and conditions of service are not unduly discriminatory or preferential. The anti-cherrypicking provision of section 212 of the FPA precludes TVA from being ordered to wheel another supplier’s power to a customer if the power would be consumed within TVA’s defined service territory.
|
•
|
Sections 221 and 222 of the FPA, applicable to all market participants, including TVA, prohibit (1) using manipulative or deceptive devices or contrivances in connection with the purchase or sale of power or transmission services subject to FERC’s jurisdiction and (2) reporting false information on the price of electricity sold at wholesale or the availability of transmission capacity to a federal agency with intent to fraudulently affect the data being compiled by the agency.
|
•
|
Under section 215 of the FPA, TVA must comply with certain standards designed to maintain transmission system reliability. These standards are approved by FERC and enforced by the Electric Reliability Organization.
|
•
|
Section 206(e) of the FPA provides FERC with authority to order refunds of excessive prices on short-term sales (transactions lasting 31 days or less) by all market participants, including TVA, in market manipulation and price gouging situations if such sales are under a FERC-approved tariff.
|
•
|
Section 220 of the FPA provides FERC with authority to issue regulations requiring the reporting, on a timely basis, of information about the availability and prices of wholesale power and transmission service by all market participants, including TVA.
|
•
|
Under sections 306 and 307 of the FPA, FERC may investigate electric industry practices, including TVA’s operations previously mentioned that are subject to FERC’s jurisdiction.
|
•
|
Under sections 316 and 316A of the FPA, FERC has authority to impose civil penalties of up to $1 million a day for each violation on entities subject to the provisions of Part II of the FPA, which includes the above provisions applicable to TVA. Criminal penalties may also result from such violations.
|
•
|
As discussed earlier in this Item 1, Business, TVA has increased its nuclear capacity, modernized its hydroelectric program, increased its purchases of renewable resources, and helped reduce demand for electricity through its
|
•
|
In 2011, TVA began planting carbon sequestration test plots near Watts Bar Dam in Rhea County, Tennessee. The test plots are designed to demonstrate the beneficial use of two types of vegetation in the terrestrial sequestration of CO
2
. While TVA has a long history of tree planting and reforestation efforts, this project is the first time TVA is planting trees to generate offsets from CO
2
sequestration. The project will also evaluate growing biomass as a sustainable energy crop and investigate how terrestrial CO
2
sequestration, wildlife habitat, and land protection can be integrated with environmental stewardship.
|
•
|
TVA is a member of the Southeast Regional Carbon Sequestration Partnership and is working with EPRI and other electric utilities on projects investigating technologies for CO
2
capture and geologic storage, as well as CO
2
sequestration via reforestation. TVA is also a federal agency participant in the Southeast Climate Center and the Appalachian Landscape Conservation Cooperative.
|
•
|
Under the Environmental Agreements, TVA agreed to significantly reduce its reliance on coal-fired generation in the future. See
Current Power Supply
—
Coal-Fired
for a discussion of the Environmental Agreements and TVA’s plans with respect to coal-fired generation.
|
•
|
In August 2011, the TVA Board approved the completion of Bellefonte Unit 1. This unit is expected to be completed by 2020 and to provide approximately 1,260 MW of capacity.
|
Air, Water, and Waste Quality Estimated Potential Environmental Expenditures
At September 30, 2011
(in millions)
|
|||||||
|
Estimated Timetable
|
|
|
|
Total Estimated Expenditures
|
||
Site environmental remediation costs
(1)
|
2012+
|
|
|
|
$
|
22
|
|
Coal combustion residuals
(2)
|
2012-2022
|
|
|
|
$
|
1,542
|
|
Proposed clean air projects
(3)
|
2012-2018
|
|
|
|
$
|
3,436
|
|
Clean Water Act requirements
(4)
|
2015-2020
|
|
|
|
TBD*
|
|
|
Notes
(1) Estimated liability for cleanup and similar environmental work for those sites for which sufficient information is available to develop a cost estimate.
(2) Includes closure of impoundments, construction of lined landfills, and construction of dewatering systems.
(3) Includes air quality projects that TVA is currently planning to undertake to comply with existing and proposed air quality regulations, but does not include any projects that may be required to comply with potential GHG regulations.
(4) Compliance plans to meet the requirements of a revised or new implementing rule under Section 316(b) of the Clean Water Act and the EPA’s revised steam electric effluent guidelines will be determined upon finalization of the rules.
* TBD – to be determined as regulations become final.
|
•
|
Provisions of the pension plans;
|
•
|
Changing employee demographics;
|
•
|
Rates of increase in compensation levels;
|
•
|
Rates of return on plan assets;
|
•
|
Discount rates used in determining future benefit obligations and required funding levels;
|
•
|
Future government regulation; and
|
•
|
Levels of contributions made to the plans.
|
•
|
The value of the investments in the trust declines significantly, as it did during the 2008-2009 recession, or the investments fail to achieve the assumed real rate of return;
|
•
|
The assumed real rate of return on plan assets, which is currently five percent, is lowered by the TVA Board or is overly optimistic;
|
•
|
Changes in technology and experience related to decommissioning cause decommissioning cost estimates to increase significantly; or
|
•
|
May have to invest a significant amount of resources to repair or replace the assets or the supporting infrastructure;
|
•
|
May be unable to operate the assets for a significant period of time;
|
•
|
May have to purchase replacement power on the open market;
|
•
|
May not be able to meet its contractual obligations to deliver power;
|
•
|
May not be able to maintain the integrity or reliability of the transmission system at normal levels;
|
•
|
May have to remediate collateral damage caused by a failure of the assets or the supporting infrastructure;
|
•
|
May have to increase its efforts to reduce vegetation intrusions onto transmission lines to comply with applicable regulations; and
|
•
|
May be required to invest substantially to meet more stringent reliability standards.
|
•
|
TVA's access to funds held in United States Treasury accounts could be limited or denied.
|
•
|
TVA's own credit ratings could be downgraded as a result of a downgrade of the United States's credit ratings.
|
•
|
The economy could be negatively impacted, resulting in reduced demand for electricity, increased expenses for borrowings, and increased cost of fuels, supplies, and other material required for TVA's operations.
|
•
|
A downgrade could increase TVA’s interest expense by increasing the interest rates that TVA pays on new Bonds that it issues. An increase in TVA’s interest expense may reduce the amount of cash available for other purposes, which may result in the need to increase borrowings, to reduce other expenses or capital investments, or to increase power rates.
|
•
|
A downgrade may result in TVA’s having to post collateral under certain physical and financial contracts that contain rating triggers.
|
•
|
A downgrade below a contractual threshold may prevent TVA from borrowing under three credit facilities totaling $2.5 billion.
|
•
|
A downgrade may lower the price of TVA’s securities in the secondary market, thereby hurting investors who sell TVA securities after the downgrade and diminishing the attractiveness and marketability of TVA Bonds.
|
•
|
Approximately 15,940 circuit miles of transmission lines (primarily 500 kilovolt and 161 kilovolt lines);
|
•
|
498 transmission substations, power switchyards, and switching stations; and
|
•
|
1,240 customer connection points (customer, generation, and interconnection).
|
•
|
Approximately 11,000 miles of reservoir shoreline;
|
•
|
Approximately 293,000 acres of reservoir land;
|
•
|
Approximately 650,000 surface acres of water; and
|
•
|
Over 100 TVA managed recreation facilities (campgrounds, boat ramps, fishing piers, hiking trails, and day use areas).
|
•
|
Under section 31 of the TVA Act, TVA has authority to dispose of surplus real property at a public auction.
|
•
|
Under section 4(k) of the TVA Act, TVA can dispose of real property for certain specified purposes, including providing replacement lands for certain entities whose lands were flooded or destroyed by dam or reservoir construction and to grant easements and rights-of-way upon which are located transmission or distribution lines.
|
•
|
Under section 15d(g) of the TVA Act, TVA can dispose of real property in connection with the construction of generating plants or other facilities under certain circumstances.
|
•
|
Under 40 U.S.C. § 1314, TVA has authority to grant easements for rights-of-way and other purposes.
|
(1)
|
TVA is a government corporation.
|
(2)
|
The area in which TVA sells power is limited by the Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. §§ 831-831ee (as amended, the “TVA Act”) under a provision known as the “fence”; however, another provision of federal law known as the “anti-cherrypicking” provision generally protects TVA from being forced to provide access to its transmission lines to others for the purpose of delivering power to customers within substantially all of TVA’s defined service area.
|
(3)
|
The rates TVA charges for power are not set or reviewed by another entity, such as a public utility commission. TVA's rates are set solely by the TVA Board. 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.
|
(4)
|
TVA is not authorized to raise capital by issuing equity securities. TVA relies primarily on cash from operations and proceeds from power program borrowings to fund its operations and is authorized by the TVA Act to issue bonds, notes, and other evidences of indebtedness ("Bonds") in an amount not to exceed $30.0 billion outstanding at any given time. Although TVA’s operations were originally funded primarily with appropriations from Congress, TVA has not received any appropriations from Congress for any activities since 1999 and, as directed by Congress, has funded essential stewardship activities primarily with power revenues.
|
•
|
The nation’s leader in improving air quality;
|
•
|
The nation’s leader in increased nuclear production;
|
•
|
The Southeast’s leader in increased energy efficiency.
|
Corporate Measure
|
Target
|
Actual
|
Net cash flow
|
$(935) Million
|
$(774) Million
|
Equivalent availability factor
|
86.0%
|
85.1%
|
Non-GAAP Reconciliation
For the year ended September 30, 2011
|
||||
|
|
|
||
Net cash provided by operating activities
|
|
$
|
2,437
|
|
Plus: Net cash used from investing activities
|
|
(3,142
|
)
|
|
Less: Net cash flow from change in fuel cost adjustment deferral
|
|
(69
|
)
|
|
Net cash flow
|
|
$
|
(774
|
)
|
Month
|
|
Base Fuel
Rate
(¢/kWh)
|
|
Fuel Cost Adjustment Rate
(¢/kWh)
|
|
Total Fuel
Rate
(¢/kWh)
|
|
Impact on Total Average Wholesale Firm Rate
|
October 2010
|
|
1.851
|
|
1.127
|
|
2.978
|
|
6.4%
|
November 2010
|
|
1.851
|
|
0.735
|
|
2.586
|
|
(5.0)%
|
December 2010
|
|
1.851
|
|
0.476
|
|
2.327
|
|
(3.5)%
|
January 2011
|
|
1.851
|
|
0.548
|
|
2.399
|
|
1.0%
|
February 2011
|
|
1.851
|
|
0.436
|
|
2.287
|
|
(1.5)%
|
March 2011
|
|
1.851
|
|
0.613
|
|
2.464
|
|
2.5%
|
April 2011
|
|
n/a
|
|
n/a
|
|
2.376
|
|
(1.2)%
|
May 2011
|
|
n/a
|
|
n/a
|
|
2.347
|
|
(0.4)%
|
June 2011
|
|
n/a
|
|
n/a
|
|
2.366
|
|
0.3%
|
July 2011
|
|
n/a
|
|
n/a
|
|
2.689
|
|
4.5%
|
August 2011
|
|
n/a
|
|
n/a
|
|
2.741
|
|
0.7%
|
September 2011
|
|
n/a
|
|
n/a
|
|
2.664
|
|
(1.0)%
|
•
|
Operation, maintenance, and administration of its power system;
|
•
|
Payments to states and counties in lieu of taxes;
|
•
|
Debt service on outstanding Bonds;
|
•
|
Payments to the U.S. Treasury as a repayment of and a return on the government’s appropriation investment in TVA’s power facilities (the "Power Program Appropriation Investment"); and
|
•
|
Such additional margin as the TVA Board may consider desirable for investment in power system assets, retirement of outstanding Bonds in advance of maturity, additional reduction of the Power Program Appropriation Investment, and other purposes connected with TVA’s power business, having due regard for the primary objectives of the TVA Act, including the objective that power shall be sold at rates as low as are feasible. See Note 15 —
Appropriation Investment
.
|
•
|
The depreciation accruals and other charges representing the amortization of capital expenditures, and
|
•
|
The net proceeds from any disposition of power facilities,
|
•
|
The reduction of its capital obligations (including Bonds and the Power Program Appropriation Investment), or
|
•
|
Investment in power assets.
|
Short-Term Borrowing Table
|
|||||||||||||||||||||||||||
|
At
September 30, 2011
|
|
For Quarter Ended September 30, 2011
|
|
For Year Ended September 30, 2011
|
|
At
September 30, 2010
|
|
For Year Ended September 30, 2010
|
|
At
September 30, 2009
|
|
For Year Ended September 30, 2009
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Amount Outstanding (at End of Period) or Average Amount Outstanding
(During Period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Discount notes
|
$
|
482
|
|
|
$
|
680
|
|
|
$
|
363
|
|
|
$
|
27
|
|
|
$
|
905
|
|
|
$
|
844
|
|
|
$
|
1,650
|
|
Weighted Average
Interest Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Discount notes
|
0.001
|
%
|
|
0.196
|
%
|
|
0.137
|
%
|
|
0.040
|
%
|
|
0.089
|
%
|
|
0.063
|
%
|
|
0.323
|
%
|
|||||||
Maximum Month-End
Amount Outstanding
During Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Discount notes
|
N/A
|
|
|
$
|
1,000
|
|
|
$
|
1,401
|
|
|
N/A
|
|
|
$
|
1,176
|
|
|
N/A
|
|
|
$
|
2,637
|
|
Summary of Long-Term Credit Facilities
At September 30, 2011
(in billions)
|
|||||||||||||||
Maturity Date
|
Facility Limit
|
|
Letters of Credit Outstanding
|
|
Cash Borrowings
|
|
Availability
|
||||||||
January 2014
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
January 2014
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
||||
May 2014
|
1.0
|
|
|
0.1
|
|
|
—
|
|
|
0.9
|
|
||||
|
$
|
2.5
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
1.9
|
|
•
|
In 2003, TVA monetized the call provisions on a $1.0 billion Bond issue and a $476 million Bond issue by entering into swaption agreements with a third party in exchange for $175 million and $81 million, respectively.
|
•
|
In 2005, TVA monetized the call provisions on two Bond issues ($42 million total par value) by entering into swaption agreements with a third party in exchange for $5 million.
|
Summary Cash Flows
For the years ended September 30
|
|||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
2,437
|
|
|
$
|
1,901
|
|
|
$
|
2,163
|
|
Investing activities
|
(3,142
|
)
|
|
(2,458
|
)
|
|
(2,287
|
)
|
|||
Financing activities
|
884
|
|
|
684
|
|
|
112
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
179
|
|
|
$
|
127
|
|
|
$
|
(12
|
)
|
Future Planned Construction Expenditures
(1)
As of September 30
|
||||||||||||||||
|
Actual
|
|
Estimated
Construction
Expenditures
|
|||||||||||||
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|||||||||
Watts Bar Unit 2
(2)
|
$
|
669
|
|
|
$
|
369
|
|
|
$
|
100
|
|
|
$
|
—
|
|
|
Other capacity expansion expenditures
(3)
|
929
|
|
|
788
|
|
|
863
|
|
|
775
|
|
|||||
Environmental expenditures
|
52
|
|
|
181
|
|
|
860
|
|
|
1,160
|
|
|||||
Coal combustion residual
|
142
|
|
|
218
|
|
|
146
|
|
|
100
|
|
|||||
Transmission expenditures
|
246
|
|
|
278
|
|
|
316
|
|
|
333
|
|
|||||
Other capital expenditures
(4)
|
787
|
|
|
850
|
|
|
777
|
|
|
775
|
|
|||||
Total construction expenditures
|
$
|
2,825
|
|
(5
|
)
|
$
|
2,684
|
|
|
$
|
3,062
|
|
|
$
|
3,143
|
|
Notes
(1) TVA plans to fund these expenditures with cash from operations and proceeds from power program financings. This table shows only expenditures that are currently planned. Additional expenditures may be required, among other things, for TVA to meet growth in demand for power in its service area or to comply with new environmental laws, regulations, or orders.
(2) The construction project and schedule for Watts Bar Unit 2 are currently being reviewed by TVA. Updates to the schedule and cost estimates are expected to be completed by the second quarter of FY 2012.
(3) Other capacity expansion expenditures includes the purchase of Magnolia for $436 million.
(4) Other capital expenditures are primarily associated with short lead time construction projects aimed at the continued safe and reliable operation of generating assets.
(5) The numbers above exclude AFUDC related to construction expenditures of $97 million and include items accrued of $69 million.
|
Energy Prepayment Obligations
|
|||||||||||||||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Thereafter
|
|
Total
|
||||||||||||||
Energy Prepayment Obligations
|
$
|
105
|
|
|
$
|
102
|
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
210
|
|
|
$
|
717
|
|
Summary Statements of Operations
For the years ended September 30
|
|||||||||||
|
2011
|
|
2010
|
|
2009
|
||||||
Operating revenues
|
$
|
11,841
|
|
|
$
|
10,874
|
|
|
$
|
11,255
|
|
Operating expenses
|
(10,404
|
)
|
|
(8,632
|
)
|
|
(9,282
|
)
|
|||
Operating income
|
1,437
|
|
|
2,242
|
|
|
1,973
|
|
|||
Other income, net
|
30
|
|
|
24
|
|
|
25
|
|
|||
Interest expense, net
|
(1,305
|
)
|
|
(1,294
|
)
|
|
(1,272
|
)
|
|||
Net income (loss)
|
$
|
162
|
|
|
$
|
972
|
|
|
$
|
726
|
|
Operating Revenue
For the years ended September 30
|
|||||||||||||||||
|
2011
|
|
Percent Change
|
|
2010
|
|
Percent Change
|
|
2009
|
||||||||
Sales of electricity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Municipalities and cooperatives
|
10,144
|
|
|
9.4
|
%
|
|
$
|
9,275
|
|
|
(3.8
|
)%
|
|
$
|
9,644
|
|
|
Industries directly served
|
1,440
|
|
|
9.0
|
%
|
|
1,321
|
|
|
(3.4
|
)%
|
|
1,367
|
|
|||
Federal agencies and other
|
139
|
|
|
18.8
|
%
|
|
117
|
|
|
(10.7
|
)%
|
|
131
|
|
|||
Total sales of electricity
|
11,723
|
|
|
9.4
|
%
|
|
10,713
|
|
|
(3.9
|
)%
|
|
11,142
|
|
|||
Other revenue
|
118
|
|
|
(26.7
|
)%
|
|
161
|
|
|
42.5
|
%
|
|
113
|
|
|||
Total operating revenues
|
$
|
11,841
|
|
|
8.9
|
%
|
|
$
|
10,874
|
|
|
(3.4
|
)%
|
|
$
|
11,255
|
|
|
Variance 2011 vs. 2010
|
|
Variance 2010 vs. 2009
|
||||
Fuel rate
|
$
|
1,312
|
|
|
$
|
(1,714
|
)
|
Volume
|
(360
|
)
|
|
580
|
|
||
Base rates
|
49
|
|
|
707
|
|
||
Off system sales and other
|
9
|
|
|
(2
|
)
|
||
Other revenue
|
(43
|
)
|
|
48
|
|
||
Total
|
$
|
967
|
|
|
$
|
(381
|
)
|
TVA Operating Expenses
For the years ended September 30
|
|||||||||||||||||
|
2011
|
|
Percent Change
|
|
2010
|
|
Percent Change
|
|
2009
|
||||||||
Fuel
|
$
|
2,926
|
|
|
39.9
|
%
|
|
$
|
2,092
|
|
|
(32.8
|
)%
|
|
$
|
3,114
|
|
Purchased power
|
1,427
|
|
|
26.6
|
%
|
|
1,127
|
|
|
(30.9
|
)%
|
|
1,631
|
|
|||
Operating and maintenance
|
3,617
|
|
|
11.9
|
%
|
|
3,232
|
|
|
34.9
|
%
|
|
2,395
|
|
|||
Depreciation and amortization
|
1,772
|
|
|
2.8
|
%
|
|
1,724
|
|
|
7.9
|
%
|
|
1,598
|
|
|||
Tax equivalents
|
662
|
|
|
44.9
|
%
|
|
457
|
|
|
(16.0
|
)%
|
|
544
|
|
|||
Total operating expenses
|
$
|
10,404
|
|
|
20.5
|
%
|
|
$
|
8,632
|
|
|
(7.0
|
)%
|
|
$
|
9,282
|
|
•
|
Final Closure Design – TVA is still in the process of designing the final closure of the failed dredge cell, other cells on-site, and the lateral expansion of the failed cell. Until the final design is completed and contracts for the work are awarded, costs estimates are subject to change.
|
•
|
Excluded Costs – TVA has not included the following categories of costs because it has determined that these costs are currently either not probable or not reasonably estimable: penalties (other than the penalties set out in the TDEC order) or regulatory directives, natural resource damages (other than payments required under a memorandum of agreement with TDEC and the Fish and Wildlife Service establishing a process and a method for resolving the natural resource damages claim), future lawsuits and future claims, long-term environmental impact costs, final long-term disposition of ash processing area, costs associated with new laws and regulations, or costs of remediating any mixed waste discovered during the ash removal process. See Note 8
.
|
•
|
Timing – In projecting decommissioning costs, two assumptions must be made to estimate the timing of plant decommissioning. First, the date of the plant’s retirement must be estimated. (At a multiple unit site, the estimated retirement date is based on the unit with the longest license period remaining, or an assumption could be made that the plant will be relicensed and operate for some time beyond the original license term.) Second, an assumption must be made on the timing of decommissioning. Currently TVA uses the assumption that decommissioning will occur within the first seven years after plant shut down. While the impact of these assumptions cannot be determined with precision, either assuming license extension or
|
•
|
Technology and Regulation – There is limited experience with actual decommissioning of large nuclear facilities. Changes in technology and experience as well as changes in regulations regarding nuclear decommissioning could cause cost estimates to change significantly. TVA’s cost studies assume current technology and regulations.
|
•
|
Discount Rate – TVA uses rates between 5.15 percent and 5.66 percent to calculate the present value of the weighted estimated cash flows required to satisfy TVA’s decommissioning obligation.
|
•
|
Cost Escalation Factors – TVA’s decommissioning estimates include an assumption that decommissioning costs will escalate over present cost levels by four percent annually.
|
•
|
Timing – In projecting non-nuclear decommissioning costs, the date of the asset’s retirement must be estimated. TVA uses a probability-weighted scenario approach based on management assumptions, type of asset, and other factors to estimate the expected retirement time period. In instances where the retirement of a specific asset differs from the anticipated retirement date, the anticipated retirement date of that specific asset is used. Additionally, TVA expects to incur certain ongoing costs subsequent to the initial asset retirement.
|
•
|
Technology and Regulation – Changes in technology and experience as well as changes in regulations regarding non-nuclear decommissioning could cause cost estimates to change significantly. TVA’s cost studies generally assume current technology and regulations. With respect to the CCR facilities, TVA assumes that any future closures will require more costly materials and processes than what is legally required at September 30, 2011.
|
•
|
Discount Rate – TVA uses its incremental lending 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 non-nuclear decommissioning obligation. At September 30, 2011, the discount rates used in the calculations range from 0.64 percent to 5.66 percent.
|
•
|
Cost Escalation Factors – TVA’s non-nuclear decommissioning estimates include an assumption that decommissioning costs will escalate over present cost levels at rates between 1.88 percent and 4.00 percent annually.
|
•
|
A downgrade could increase TVA’s interest expense by increasing the interest rates that TVA pays on new Bonds that it issues. An increase in TVA’s interest expense may reduce the amount of cash available for other purposes, which may result in the need to increase borrowings, to reduce other expenses or capital investments, or to increase power rates.
|
•
|
A downgrade could result in TVA's having to post additional collateral under certain physical and financial contracts that contain rating triggers.
|
•
|
A downgrade below a contractual threshold could prevent TVA from borrowing under three credit facilities totaling $2.5 billion.
|
•
|
A downgrade could lower the price of TVA securities in the secondary market, thereby hurting investors who sell TVA securities after the downgrade and diminishing the attractiveness and marketability of TVA Bonds.
|
Note No.
|
|
|
|
Page No.
|
1
|
|
|
||
2
|
|
|
||
3
|
|
Accounts Receivable
, net
|
|
|
4
|
|
Inventories
, net
|
|
|
5
|
|
|
||
6
|
|
|
||
7
|
|
|
||
8
|
|
|
||
9
|
|
|
||
10
|
|
|
||
11
|
|
|
||
12
|
|
|
||
13
|
|
|
||
14
|
|
|
||
15
|
|
|
||
16
|
|
|
||
17
|
|
|
||
18
|
|
|
||
19
|
|
|
||
20
|
|
|
||
21
|
|
|
||
22
|
|
|
||
23
|
|
|
1.
|
Summary of Significant Accounting Policies
|
|
Year Ended
September 30, 2010
|
|
Year Ended
September 30, 2009
|
||||
Fuel
|
$
|
2,092
|
|
|
$
|
3,114
|
|
Purchased power
|
1,127
|
|
|
1,631
|
|
2.
|
Impact of New Accounting Standards and Interpretations
|
3.
|
Accounts Receivable, Net
|
4.
|
Inventories, Net
|
Inventories, Net
At September 30
|
|||||||
|
2011
|
|
2010
|
||||
Fuel inventory
|
$
|
489
|
|
|
$
|
539
|
|
Materials and supplies inventory
|
555
|
|
|
486
|
|
||
Emission allowance inventory
|
11
|
|
|
11
|
|
||
Allowance for inventory obsolescence
|
(27
|
)
|
|
(24
|
)
|
||
|
|
|
|
||||
Inventories, net
|
$
|
1,028
|
|
|
$
|
1,012
|
|
5.
|
Completed Plant
|
6.
|
Other Long-Term Assets
|
Other Long-Term Assets
At September 30
|
|||||||
|
2011
|
|
2010
|
||||
Coal contract derivative assets
|
$
|
285
|
|
|
$
|
103
|
|
Loans and other long-term receivables, net
|
74
|
|
|
68
|
|
||
Other long-term assets
|
13
|
|
|
20
|
|
||
|
|
|
|
||||
Total other long-term assets
|
$
|
372
|
|
|
$
|
191
|
|
7.
|
Regulatory Assets and Liabilities
|
Regulatory Assets and Liabilities
At September 30
|
|||||||
|
2011
|
|
2010
|
||||
Current regulatory assets
|
|
|
|
||||
Deferred nuclear generating units
|
$
|
236
|
|
|
$
|
391
|
|
Unrealized losses on commodity derivatives
|
225
|
|
|
184
|
|
||
Environmental cleanup costs – Kingston ash spill
|
73
|
|
|
76
|
|
||
Fuel cost adjustment receivable
|
7
|
|
|
84
|
|
||
Deferred capital leases
|
2
|
|
|
14
|
|
||
Deferred outage costs
|
—
|
|
|
42
|
|
||
Total current regulatory assets
|
543
|
|
|
791
|
|
||
|
|
|
|
||||
Non-current regulatory assets
|
|
|
|
|
|
||
Deferred pension costs and other post-retirement benefits costs
|
5,807
|
|
|
4,711
|
|
||
Unrealized losses on swaps and swaptions
|
1,164
|
|
|
797
|
|
||
Nuclear decommissioning costs
|
1,012
|
|
|
898
|
|
||
Environmental cleanup costs - Kingston ash spill
|
874
|
|
|
987
|
|
||
Deferred nuclear generating units
|
709
|
|
|
1,565
|
|
||
Construction costs
|
619
|
|
|
—
|
|
||
Non-nuclear decommissioning costs
|
519
|
|
|
410
|
|
||
Environmental agreements
|
346
|
|
|
—
|
|
||
Unrealized losses on commodity derivatives
|
221
|
|
|
144
|
|
||
Other non-current regulatory assets
|
234
|
|
|
244
|
|
||
Total non-current regulatory assets
|
11,505
|
|
|
9,756
|
|
||
|
|
|
|
||||
Total regulatory assets
|
$
|
12,048
|
|
|
$
|
10,547
|
|
|
|
|
|
||||
Current regulatory liabilities
|
|
|
|
|
|
||
Unrealized gains on commodity derivatives
|
$
|
153
|
|
|
$
|
57
|
|
Fuel cost adjustment tax equivalents
|
127
|
|
|
—
|
|
||
Capital leases
|
—
|
|
|
6
|
|
||
Total current regulatory liabilities
|
280
|
|
|
63
|
|
||
|
|
|
|
||||
Non-current regulatory liabilities
|
|
|
|
|
|
||
Unrealized gains on commodity derivatives
|
285
|
|
|
106
|
|
||
|
|
|
|
||||
Total regulatory liabilities
|
$
|
565
|
|
|
$
|
169
|
|
8.
|
Kingston Fossil Plant Ash Spill
|
9.
|
Other Long-Term Liabilities
|
10.
|
Asset Retirement Obligations
|
11.
|
Debt
|
•
|
the remainder of TVA’s gross power revenues
|
•
|
after deducting
|
•
|
before deducting depreciation accruals or other charges representing the amortization of capital expenditures, plus
|
•
|
the net proceeds from the sale or other disposition of any power facility or interest therein.
|
Debt Securities Activity
For the year ended September 30
|
|||||||
Issues
|
2011
|
|
2010
|
||||
electronotes
®
|
|
|
|
||||
First quarter
|
$
|
—
|
|
|
$
|
82
|
|
Second quarter
|
40
|
|
|
34
|
|
||
Third quarter
|
42
|
|
|
63
|
|
||
Fourth quarter
|
17
|
|
|
—
|
|
||
2009 Series C
|
—
|
|
|
500
|
|
||
2010 Series A
|
—
|
|
|
1,000
|
|
||
2011 Series A
|
1,500
|
|
|
—
|
|
||
Total
|
$
|
1,599
|
|
|
$
|
1,679
|
|
|
|
|
|
||||
Redemptions/Maturities
|
|
|
|
|
|
||
electronotes
®
|
|
|
|
|
|
||
First quarter
|
$
|
2
|
|
|
$
|
1
|
|
Second quarter
|
10
|
|
|
25
|
|
||
Third quarter
|
2
|
|
|
3
|
|
||
Fourth quarter
|
1
|
|
|
34
|
|
||
2001 Series A
|
1,000
|
|
|
—
|
|
||
2009 Series A
|
4
|
|
|
3
|
|
||
2009 Series B
|
2
|
|
|
3
|
|
||
Total
|
$
|
1,021
|
|
|
$
|
69
|
|
Short-Term Debt
At September 30
|
||||||||||||||
CUSIP or Other Identifier
|
Maturity
|
|
Call/(Put) Date
|
|
Coupon Rate
|
|
2011
Par Amount
|
|
2010
Par Amount
|
|||||
Discount notes (net of discount)
|
|
|
|
|
|
|
$
|
482
|
|
|
$
|
27
|
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
|
|
|
|||||
88059TEH0
|
10/15/2023
|
|
10/15/2011
|
|
5.00
|
%
|
|
14
|
|
|
—
|
|
||
880591EE8
|
5/15/2012
|
|
|
|
2.25
|
%
|
|
3
|
|
|
3
|
|
||
88059TEL1
|
5/15/2012
|
|
|
|
2.65
|
%
|
|
3
|
|
|
3
|
|
||
880591EF5
|
6/15/2012
|
|
|
|
3.77
|
%
|
|
2
|
|
|
2
|
|
||
880591DL3
|
5/23/2012
|
|
|
|
7.14
|
%
|
|
29
|
|
|
—
|
|
||
880591DT6
|
5/23/2012
|
|
|
|
6.79
|
%
|
|
1,486
|
|
|
—
|
|
||
880591DN9
|
1/18/2011
|
|
|
|
5.63
|
%
|
|
—
|
|
|
1,000
|
|
||
|
|
|
|
|
|
|
1,537
|
|
|
1,008
|
|
|||
Total debt due within one year, net
|
|
|
|
|
|
|
$
|
2,019
|
|
|
$
|
1,035
|
|
Long-Term Debt
(1)
At September 30
|
|||||||||||||||
CUSIP or Other Identifier
|
Maturity
|
|
Coupon
Rate
|
|
Call Date
|
|
2011 Par
|
|
2010 Par
|
|
Stock Exchange Listings
|
||||
electronotes
®(2)
|
02/15/2020 - 07/15/2041
|
|
2.65 - 5.00%
|
|
10/15/2011 - 07/15/2016
|
|
$
|
661
|
|
|
$
|
591
|
|
|
None
|
880591DN9
|
1/18/2011
|
|
5.63%
|
|
|
|
—
|
|
|
—
|
|
|
New York, Luxembourg
|
||
880591DL3
|
5/23/2012
|
|
7.14%
|
|
|
|
—
|
|
|
29
|
|
|
New York
|
||
880591DT6
|
5/23/2012
|
|
6.79%
|
|
|
|
—
|
|
|
1,486
|
|
|
New York
|
||
880591CW0
|
3/15/2013
|
|
6.00%
|
|
|
|
1,359
|
|
|
1,359
|
|
|
New York, Hong Kong, Luxembourg, Singapore
|
||
880591DW9
|
8/1/2013
|
|
4.75%
|
|
|
|
940
|
|
|
940
|
|
|
New York, Luxembourg
|
||
880591DY5
|
6/15/2015
|
|
4.38%
|
|
|
|
1,000
|
|
|
1,000
|
|
|
New York, Luxembourg
|
||
880591EE8
(3)
|
11/15/2015
|
|
2.25%
|
|
|
|
11
|
|
|
15
|
|
|
None
|
||
880591DS8
|
12/15/2016
|
|
4.88%
|
|
|
|
524
|
|
|
524
|
|
|
New York
|
||
880591EA6
|
7/18/2017
|
|
5.50%
|
|
|
|
1,000
|
|
|
1,000
|
|
|
New York, Luxembourg
|
||
880591CU4
|
12/15/2017
|
|
6.25%
|
|
|
|
650
|
|
|
650
|
|
|
New York
|
||
880591EC2
|
4/1/2018
|
|
4.50%
|
|
|
|
1,000
|
|
|
1,000
|
|
|
New York, Luxembourg
|
||
880591EL2
|
2/15/2021
|
|
3.88%
|
|
|
|
1,500
|
|
|
—
|
|
|
New York
|
||
880591DC3
|
6/7/2021
|
|
5.81%
(4)
|
|
|
|
312
|
|
|
314
|
|
|
New York, Luxembourg
|
||
880591CJ9
|
11/1/2025
|
|
6.75%
|
|
|
|
1,350
|
|
|
1,350
|
|
|
New York, Hong Kong, Luxembourg, Singapore
|
||
880591300
(5)
|
6/1/2028
|
|
4.73%
|
|
|
|
330
|
|
|
330
|
|
|
New York
|
||
880591409
(5)
|
5/1/2029
|
|
4.50%
|
|
|
|
274
|
|
|
274
|
|
|
New York
|
||
880591DM1
|
5/1/2030
|
|
7.13%
|
|
|
|
1,000
|
|
|
1,000
|
|
|
New York, Luxembourg
|
||
880591DP4
|
6/7/2032
|
|
6.59%
(4)
|
|
|
|
390
|
|
|
393
|
|
|
New York, Luxembourg
|
||
880591DV1
|
7/15/2033
|
|
4.70%
|
|
|
|
472
|
|
|
472
|
|
|
New York, Luxembourg
|
||
880591EF5
(3)
|
6/15/2034
|
|
3.77%
|
|
|
|
443
|
|
|
445
|
|
|
None
|
||
880591DX7
|
6/15/2035
|
|
4.65%
|
|
|
|
436
|
|
|
436
|
|
|
New York
|
||
880591CK6
|
4/1/2036
|
|
5.98%
|
|
|
|
121
|
|
|
121
|
|
|
New York
|
||
880591CS9
|
4/1/2036
|
|
5.88%
|
|
|
|
1,500
|
|
|
1,500
|
|
|
New York
|
||
880591CP5
|
1/15/2038
|
|
6.15%
|
|
|
|
1,000
|
|
|
1,000
|
|
|
New York
|
||
880591ED0
|
6/15/2038
|
|
5.50%
|
|
|
|
500
|
|
|
500
|
|
|
New York
|
||
880591EH1
|
9/15/2039
|
|
5.25%
|
|
|
|
2,000
|
|
|
2,000
|
|
|
New York
|
||
880591BL5
|
4/15/2042
|
|
8.25%
|
|
4/15/2012
|
|
1,000
|
|
|
1,000
|
|
|
New York
|
||
880591DU3
|
6/7/2043
|
|
4.96%
(4)
|
|
|
|
234
|
|
|
236
|
|
|
New York, Luxembourg
|
12.
|
Leaseback Obligations
|
13.
|
Risk Management Activities and Derivative Transactions
|
Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2)
|
||||||||
Derivatives in Cash Flow Hedging Relationship
|
|
Amount of Exchange
Gain (Loss) Reclassified from
OCI to Interest Expense
Years Ended
September 30
(1)
|
||||||
|
|
2011
|
|
2010
|
||||
Currency swaps
|
|
$
|
7
|
|
|
$
|
17
|
|
Note
(1) There were no ineffective portions or amounts excluded from effectiveness testing for any of the periods presented. Also see Note 14.
|
Currency Swaps Outstanding
At September 30, 2011
|
|||
Effective Date of Currency Swap Contract
|
Associated TVA Bond Issues – Currency Exposure
|
Expiration Date of Swap
|
Overall Effective
Cost to TVA
|
2003
|
£150 million
|
2043
|
4.96%
|
2001
|
£250 million
|
2032
|
6.59%
|
1999
|
£200 million
|
2021
|
5.81%
|
Commodity Contract Derivatives
At September 30
|
|||||||||||
|
2011
|
|
2010
|
||||||||
|
Number of
Contracts
|
|
Notional Amount
|
|
Fair Value (MtM)
|
|
Number of Contracts
|
|
Notional Amount
|
|
Fair Value (MtM)
|
Coal Contract Derivatives
|
38
|
|
66 million tons
|
|
$239
|
|
11
|
|
27 million tons
|
|
$103
|
Natural Gas Contract Derivatives
|
13
|
|
5 million mmBtu
|
|
$—
|
|
3
|
|
1 million mmBtu
|
|
$—
|
•
|
If TVA remains a majority-owned U.S. government entity but Standard & Poors (“S&P”) or Moody's Investors Service ("Moody’s") downgrades TVA’s credit rating to AA or Aa2, respectively, TVA would be required to post an additional $75 million of collateral in excess of its September 30, 2011, obligation; and
|
•
|
If TVA ceases to be majority-owned by the U.S. government, its credit rating would likely change and TVA would be required to post additional collateral.
|
14.
|
Fair Value Measurements
|
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.
|
Estimated Values of Financial Instruments
At September 30
|
|||||||||||||||
|
2011
|
|
2010
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Loans and other long-term receivables, net
|
$
|
74
|
|
|
$
|
68
|
|
|
$
|
68
|
|
|
$
|
60
|
|
Long-term debt (including current portion), net
|
23,949
|
|
|
29,190
|
|
|
23,397
|
|
|
27,193
|
|
15.
|
Proprietary Capital
|
Summary of Proprietary Capital Activity
At September 30
|
|||||||||||||||
|
2011
|
|
2010
|
||||||||||||
Appropriation Investment
|
Power Program
|
|
Nonpower
Programs
|
|
Power Program
|
|
Nonpower
Programs
|
||||||||
Balance at beginning of year
|
$
|
328
|
|
|
$
|
4,351
|
|
|
$
|
348
|
|
|
$
|
4,355
|
|
Return of power program appropriation investment
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|
(4
|
)
|
||||
Balance at end of year
|
308
|
|
|
4,351
|
|
|
328
|
|
|
4,351
|
|
||||
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at beginning of year
|
4,264
|
|
|
(3,711
|
)
|
|
3,291
|
|
|
(3,701
|
)
|
||||
Net income (expense) for year
|
172
|
|
|
(10
|
)
|
|
982
|
|
|
(10
|
)
|
||||
Return on power program appropriation investment
|
(7
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
||||
Balance at end of year
|
4,429
|
|
|
(3,721
|
)
|
|
4,264
|
|
|
(3,711
|
)
|
||||
Net proprietary capital at September 30
|
$
|
4,737
|
|
|
$
|
630
|
|
|
$
|
4,592
|
|
|
$
|
640
|
|
16.
|
Other Income (Expense), Net
|
17.
|
Supplemental Cash Flow Information
|
18.
|
Benefit Plans
|
•
|
Original Benefit Structure.
The pension benefit for a member participating in the Original Benefit Structure is based on the member’s creditable service, the member’s average monthly salary for the highest three consecutive years of base pay, and a pension factor based on the member’s age and years of service, less a Social Security offset.
|
•
|
Cash Balance Benefit Structure.
The pension benefit for a member participating in the Cash Balance Benefit Structure is based on credits accumulated in the member’s account and the member’s age. A member’s account receives pay credits equal to six percent of his or her straight-time earnings. The account also receives interest credits at a rate set at the beginning of each calendar year equal to the change in the Consumer Price Index ("CPI") plus three percent, with the provision that the rate may not be less than six percent or more than 10 percent. The rates of the credits were six percent for calendar years 2011 and 2010.
|
Obligations and Funded Status
For the year ended September 30
|
|||||||||||||||
|
Pension Benefits
|
|
Other Post-Retirement Benefits
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
10,394
|
|
|
$
|
9,266
|
|
|
$
|
658
|
|
|
$
|
665
|
|
Service cost
|
120
|
|
|
99
|
|
|
13
|
|
|
12
|
|
||||
Interest cost
|
502
|
|
|
513
|
|
|
32
|
|
|
37
|
|
||||
Plan participants’ contributions
|
30
|
|
|
29
|
|
|
78
|
|
|
81
|
|
||||
Amendments
|
—
|
|
|
3
|
|
|
—
|
|
|
(90
|
)
|
||||
Actuarial loss
|
803
|
|
|
1,077
|
|
|
135
|
|
|
69
|
|
||||
Net transfers from variable fund/401(k) plan
|
8
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Expenses paid
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(597
|
)
|
|
(591
|
)
|
|
(116
|
)
|
|
(116
|
)
|
||||
Benefit obligation at end of year
|
11,255
|
|
|
10,394
|
|
|
800
|
|
|
658
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Change in plan assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of net plan assets at beginning of year
|
6,792
|
|
|
6,643
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
44
|
|
|
707
|
|
|
—
|
|
|
—
|
|
||||
Plan participants’ contributions
|
30
|
|
|
29
|
|
|
78
|
|
|
81
|
|
||||
Net transfers from variable fund/401(k) plan
|
8
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
274
|
|
|
6
|
|
|
38
|
|
|
35
|
|
||||
Expenses paid
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(597
|
)
|
|
(591
|
)
|
|
(116
|
)
|
|
(116
|
)
|
||||
Fair value of net plan assets at end of year
|
6,546
|
|
|
6,792
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Funded status
|
$
|
(4,709
|
)
|
|
$
|
(3,602
|
)
|
|
$
|
(800
|
)
|
|
$
|
(658
|
)
|
Amounts Recognized in the Balance Sheet
At September 30
|
|||||||||||||||
|
Pension Benefits
|
|
Other Post-Retirement Benefits
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Regulatory assets
|
$
|
5,433
|
|
|
$
|
4,456
|
|
|
$
|
374
|
|
|
$
|
255
|
|
Accounts payable and accrued liabilities
|
(6
|
)
|
|
(4
|
)
|
|
(39
|
)
|
|
(35
|
)
|
||||
Post-retirement and post-employment benefit obligations
|
(4,703
|
)
|
|
(3,598
|
)
|
|
(761
|
)
|
|
(623
|
)
|
Postretirement Benefit Costs Deferred as
Regulatory Assets
At September 30
|
|||||||||||||||
|
Pension Benefits
|
|
Other Post-Retirement Benefits
|
||||||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||||||
Unrecognized prior service cost (credit)
|
$
|
(255
|
)
|
|
$
|
(279
|
)
|
|
$
|
(58
|
)
|
|
$
|
(64
|
)
|
Unrecognized net loss
|
5,688
|
|
|
4,724
|
|
|
432
|
|
|
319
|
|
||||
Amount deferred due to actions of regulator
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Total regulatory assets
|
$
|
5,433
|
|
|
$
|
4,456
|
|
|
$
|
374
|
|
|
$
|
255
|
|
Components of Net Periodic Benefit Cost
For the years ended September 30
|
|||||||||||||||||||||||
|
Pension Benefits
|
|
Other Post-Retirement Benefits
|
||||||||||||||||||||
|
2011
|
|
2010
|
|
2009
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
120
|
|
|
$
|
99
|
|
|
$
|
84
|
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
7
|
|
Interest cost
|
502
|
|
|
513
|
|
|
581
|
|
|
32
|
|
|
37
|
|
|
36
|
|
||||||
Expected return on plan assets
|
(488
|
)
|
|
(548
|
)
|
|
(543
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost (credit)
|
(23
|
)
|
|
(24
|
)
|
|
37
|
|
|
(6
|
)
|
|
6
|
|
|
5
|
|
||||||
Recognized net actuarial loss
|
282
|
|
|
181
|
|
|
14
|
|
|
22
|
|
|
17
|
|
|
7
|
|
||||||
Net periodic benefit cost as actuarially determined
|
393
|
|
|
221
|
|
|
173
|
|
|
61
|
|
|
72
|
|
|
55
|
|
||||||
Amount charged (capitalized) due to actions of regulator
|
11
|
|
|
71
|
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total net periodic benefit cost recognized
|
$
|
404
|
|
|
$
|
292
|
|
|
$
|
91
|
|
|
$
|
61
|
|
|
$
|
72
|
|
|
$
|
55
|
|
Actuarial Assumptions
At September 30
|
|||||||||||
|
Pension Benefits
|
|
Other Post-Retirement Benefits
|
||||||||
|
2011
|
|
2010
|
|
2011
|
|
2010
|
||||
Assumptions utilized to determine benefit obligations at September 30
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.50
|
%
|
|
5.00
|
%
|
|
4.50
|
%
|
|
5.00
|
%
|
Expected return on plan assets
|
7.25
|
%
|
|
7.50
|
%
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase
|
4.43
|
%
|
|
4.41
|
%
|
|
N/A
|
|
|
N/A
|
|
Initial health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
8.00
|
%
|
|
8.00
|
%
|
Ultimate health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
5.00
|
%
|
|
5.00
|
%
|
Ultimate trend rate is reached in year beginning
|
N/A
|
|
|
N/A
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
||||
Assumptions utilized to determine net periodic benefit cost for the years ended September 30
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
5.00
|
%
|
|
5.75
|
%
|
|
5.00
|
%
|
|
5.75
|
%
|
Expected return on plan assets
|
7.50
|
%
|
|
7.75
|
%
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase
|
4.41
|
%
|
|
4.40
|
%
|
|
N/A
|
|
|
N/A
|
|
Initial health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
8.00
|
%
|
|
8.00
|
%
|
Ultimate health care cost trend rate
|
N/A
|
|
|
N/A
|
|
|
5.00
|
%
|
|
5.00
|
%
|
Ultimate trend rate is reached in year beginning
|
N/A
|
|
|
N/A
|
|
|
2016
|
|
|
2015
|
|
Asset Holdings of TVARS
At September 30
|
|||||||||
|
|
|
|
Plan Assets at September 30
|
|||||
Asset Category
|
|
Target Allocation
|
|
2011
|
|
2010
|
|||
U.S. equity securities
|
|
22.50
|
%
|
|
20.37
|
%
|
|
22.46
|
%
|
Non-U.S. equity securities
|
|
22.50
|
%
|
|
19.54
|
%
|
|
23.30
|
%
|
Private equity holdings or similar alternative investments
|
|
10.00
|
%
|
|
10.94
|
%
|
|
9.98
|
%
|
Private real estate holdings
|
|
5.00
|
%
|
|
4.26
|
%
|
|
1.93
|
%
|
Fixed income securities
|
|
31.00
|
%
|
|
34.43
|
%
|
|
32.87
|
%
|
High yield securities
|
|
9.00
|
%
|
|
9.53
|
%
|
|
8.66
|
%
|
Cash and equivalents
|
|
—
|
%
|
|
0.93
|
%
|
|
0.80
|
%
|
|
|
|
|
|
|
|
|||
Total
|
|
100.00
|
%
|
|
100.00
|
%
|
|
100.00
|
%
|
TVA Retirement System
At September 30, 2011
|
|||||||||||||||
|
Total
(1) (2)
|
|
Quoted Prices in Active Markets for Identical
Assets/Liabilities
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
1,045
|
|
|
$
|
1,045
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Preferred securities
|
20
|
|
|
15
|
|
|
—
|
|
|
5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|||||
Corporate debt securities
|
1,276
|
|
|
—
|
|
|
1,275
|
|
|
1
|
|
||||
Residential mortgage-backed securities
|
455
|
|
|
—
|
|
|
450
|
|
|
5
|
|
||||
Debt securities issued by U.S. Treasury and other U.S. government agencies
|
454
|
|
|
450
|
|
|
4
|
|
|
—
|
|
||||
Debt securities issued by foreign governments
|
35
|
|
|
—
|
|
|
35
|
|
|
—
|
|
||||
Asset-backed securities
|
102
|
|
|
—
|
|
|
93
|
|
|
9
|
|
||||
Debt securities issued by state/local governments
|
40
|
|
|
—
|
|
|
33
|
|
|
7
|
|
||||
Commercial mortgage-backed securities
|
18
|
|
|
—
|
|
|
18
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Commingled Funds
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity
|
924
|
|
|
—
|
|
|
924
|
|
|
—
|
|
||||
Debt
|
779
|
|
|
—
|
|
|
779
|
|
|
—
|
|
||||
Blended
|
300
|
|
|
—
|
|
|
300
|
|
|
—
|
|
||||
Institutional mutual funds
|
51
|
|
|
51
|
|
|
—
|
|
|
—
|
|
||||
Cash equivalents
|
599
|
|
|
1
|
|
|
598
|
|
|
—
|
|
||||
Private equity funds
|
481
|
|
|
—
|
|
|
—
|
|
|
481
|
|
||||
Private real estate funds
|
326
|
|
|
—
|
|
|
21
|
|
|
305
|
|
||||
Treasury bills, U.S. Government notes and securities held as futures and other derivative collateral
|
57
|
|
|
28
|
|
|
29
|
|
|
—
|
|
||||
Securities lending commingled funds
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward receivable
|
599
|
|
|
—
|
|
|
599
|
|
|
—
|
|
||||
Interest rate swaps
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Purchased options
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Assets
|
$
|
7,569
|
|
|
$
|
1,590
|
|
|
$
|
5,166
|
|
|
$
|
813
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward payable
|
$
|
601
|
|
|
$
|
—
|
|
|
$
|
601
|
|
|
$
|
—
|
|
Futures
|
17
|
|
|
17
|
|
|
—
|
|
|
—
|
|
||||
Credit default swaps
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Written option obligations
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Liabilities
|
$
|
626
|
|
|
$
|
17
|
|
|
$
|
609
|
|
|
$
|
—
|
|
Notes
(1) Excludes approximately $394 million in net payables associated with security purchases and sales and various other payables.
(2) Excludes a $3 million payable for collateral on loaned securities in connection with TVARS’s participation in securities lending programs.
|
Estimated Future Benefits Payments
At September 30, 2011
|
|||||||
|
Pension
Benefits
|
|
Other Post-Retirement Benefits
|
||||
2012
|
$
|
717
|
|
|
$
|
40
|
|
2013
|
707
|
|
|
41
|
|
||
2014
|
708
|
|
|
43
|
|
||
2015
|
713
|
|
|
44
|
|
||
2016
|
716
|
|
|
46
|
|
||
2017 - 2021
|
3,609
|
|
|
235
|
|
19.
|
Asset Additions and Dispositions
|
20.
|
Commitments and Contingencies
|
Commitments and Contingencies
Payments due in the year ending September 30
|
||||||||||||||||||||||||||||
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt
(1)
|
|
$
|
2,019
|
|
|
$
|
2,308
|
|
|
$
|
32
|
|
|
$
|
1,032
|
|
|
$
|
32
|
|
|
$
|
19,236
|
|
|
$
|
24,659
|
|
Lease obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Capital
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
9
|
|
|||||||
Non-cancelable operating
|
|
74
|
|
|
59
|
|
|
34
|
|
|
24
|
|
|
24
|
|
|
147
|
|
|
362
|
|
|||||||
Purchase obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Power
|
|
223
|
|
|
158
|
|
|
158
|
|
|
161
|
|
|
168
|
|
|
4,212
|
|
|
5,080
|
|
|||||||
Fuel
|
|
1,856
|
|
|
1,502
|
|
|
1,252
|
|
|
1,205
|
|
|
760
|
|
|
1,942
|
|
|
8,517
|
|
|||||||
Other
|
|
109
|
|
|
73
|
|
|
62
|
|
|
58
|
|
|
57
|
|
|
574
|
|
|
933
|
|
|||||||
Payments on other financings
|
|
138
|
|
|
488
|
|
|
100
|
|
|
104
|
|
|
104
|
|
|
609
|
|
|
1,543
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total
|
|
$
|
4,425
|
|
|
$
|
4,588
|
|
|
$
|
1,638
|
|
|
$
|
2,584
|
|
|
$
|
1,145
|
|
|
$
|
26,723
|
|
|
$
|
41,103
|
|
Note
(1) Does not include noncash items of foreign currency exchange loss of $7 million and net discount on sale of Bonds of $235 million.
|
Energy Prepayment Obligations
|
||||||||||||||||||||||||||||
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
Thereafter
|
|
Total
|
||||||||||||||
Energy Prepayment Obligations
|
|
$
|
105
|
|
|
$
|
102
|
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
100
|
|
|
$
|
210
|
|
|
$
|
717
|
|
•
|
Most existing and possible claims against TVA based on alleged NSR and associated violations are waived and cannot be brought against TVA. Some possible claims for sulfuric acid mist and GHG emissions can still be brought against TVA. Additionally, the agreements do not address compliance with new laws and regulations or the cost associated with such compliance.
|
•
|
The EPA generally will not enforce NSR requirements for new plant maintenance, repair, and component
|
•
|
TVA commits to retiring on a phased schedule two units at John Sevier, the six small units at Widows Creek Fossil Plant, and 10 units at Johnsonville. This is a total of approximately 2,700 MW (nameplate capacity) or 2,200 MW (summer net dependable capability). The majority of these retirement costs have been previously included in the ARO liability. Further, the depreciation expense related to these facilities was changed beginning in April 2011 in order to depreciate the assets over their remaining useful lives.
|
•
|
Of the remaining 5,600 MW (nameplate capacity) or 4,500 MW (summer net dependable capability) coal-fired fleet capacity that is not already fully equipped with advanced SO
2
or NO
x
controls, TVA must decide whether to control, convert, or retire 4,300 MW (nameplate capacity) or 3,500 MW (summer net dependable capability) on a unit by unit schedule which can extend until 2019.
|
•
|
Annual, declining emission caps are set for SO
2
and NO
x
.
|
•
|
TVA, with EPA approval, will invest $290 million in energy efficiency projects, demand response projects, renewable energy projects, and other TVA projects by approximately June 2016.
|
•
|
TVA will provide Alabama, Kentucky, North Carolina, and Tennessee a total of $60 million in annual installments from 2011 through 2016 to fund environmental projects, giving a preference for projects in the Tennessee River watershed or service area, $4 million of which was paid in 2011.
|
•
|
The civil penalties of $10 million were paid in July 2011 and expensed during the year ended September 30, 2011. The civil penalty was divided among the EPA, Alabama, Kentucky, and Tennessee.
|
•
|
The Proceeding Involving the John Sevier CAA Permit, and
|
•
|
The Proceeding Involving the Shawnee Fossil Plant (“Shawnee”) CAA Permit.
|
•
|
The Case Involving Alleged Violations of New Source Review Regulations at Bull Run,
|
•
|
The Case Brought by North Carolina Alleging Public Nuisance, and
|
•
|
The Proceeding Involving the Paradise Fossil Plant (“Paradise”) CAA Permit.
|
•
|
Petition to Immediately Suspend the Operating Licenses of GE BWR Mark I Units Pending the Full NRC Review With Independent Expert and Public Participation From Affected Emergency Planning Zone Communities
|
•
|
Twelve separate petitions on various issues
|
•
|
Petition Pursuant to 10 CFR 2.206 - Demand For Information Regarding Compliance with 10 CFR 50, Appendix A, General Design Criterion 44, Cooling Water, and 10 CFR 50.49, Environmental Qualification
|
21.
|
Related Parties
|
22.
|
Unaudited Quarterly Financial Information
|
2010
|
|||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Total
|
||||||||||
Operating revenues
|
$
|
2,349
|
|
|
$
|
2,622
|
|
|
$
|
2,587
|
|
|
$
|
3,316
|
|
|
$
|
10,874
|
|
Operating expenses
|
1,878
|
|
|
1,875
|
|
|
2,073
|
|
|
2,806
|
|
|
8,632
|
|
|||||
Operating income
|
471
|
|
|
747
|
|
|
514
|
|
|
510
|
|
|
2,242
|
|
|||||
Net income (loss)
|
150
|
|
|
430
|
|
|
199
|
|
|
193
|
|
|
972
|
|
23.
|
Subsequent Events
|
2012 TVA Corporate Scorecard
|
|||||||
|
|
|
Goals
|
||||
Performance Measure
|
Weight
|
|
Threshold
(50%)
|
|
Target
(100%)
|
|
Maximum
(150%)
|
|
|
|
|
|
|
|
|
Net Cash Flow ($ Millions)
(1)
|
50%
|
|
$0
(Budget less $200)
|
|
$200
(Budget includes $200 of cash reserves)
|
|
$400
(Budget plus $200)
|
|
|
|
|
|
|
|
|
Nuclear Equivalent Availability Factor
(2)
|
25%
|
|
89.2%
|
|
90.1%
|
|
92.2%
|
|
|
|
|
|
|
|
|
Critical Fossil Seasonal Equivalent Forced Outage Rate
(3)
|
25%
|
|
8.5%
|
|
6.8%
|
|
5.1%
|
Notes
(1) Net Cash Flow for this purpose is a non-GAAP measure that is derived from items in the Statement of Cash Flow as follows: Net Cash Flow = $200,000,000 cash reserves plus Cash Flow from Operations plus Cash Flow Used in Investing Activities minus Net Cash Flow from Change in Fuel Cost Adjustment Deferral Account.
(2) Nuclear Equivalent Availability Factor is a ratio of actual available generation from the nuclear generating assets in a given period compared to maximum availability.
(3) Critical Fossil Seasonal Equivalent Forced Outage Rate is the percentage of generation loss due to forced outages with respect to total generation capability for the peak periods of December-March and June-September. Forced outages are unplanned outages caused by equipment failures or problems. This calculation only includes critical low-cost coal-fired plants (Allen Fossil Plant, Cumberland, Gallatin, Paradise and Shawnee) and three combined-cycle plants (Caledonia, Lagoon Creek and Southaven).
|
•
|
For Mr. Thomas, his target annual incentive opportunity will increase from 65 percent of salary to 80 percent of salary, his target long-term incentive opportunity will decrease from 125 percent of salary to 120 percent of salary, and he will receive an additional long-term deferred compensation credit of $50,000 (which will give him total credits of $150,000 for 2012).
|
•
|
For Mr. McCollum, his target annual incentive opportunity will increase from 70 percent of salary to 80 percent of salary and his target long-term incentive opportunity will increase from 100 percent of salary to 120 percent of salary.
|
•
|
For Ms. Greene, her target annual incentive opportunity will increase from 60 percent of salary to 80 percent of salary, and she will receive an additional long-term deferred compensation credit of $100,000 (which will give her total credits of $250,000 for 2012).
|
•
|
For Mr. Swafford, he will receive an additional long-term deferred compensation credit of $125,000 (which will give him total credits of $225,000 for 2012).
|
Executive Officers
|
Title
|
Age
|
Employment Commenced
|
Tom Kilgore
|
President and Chief Executive Officer
|
63
|
2005
|
John M. Thomas, III
|
Chief Financial Officer
|
48
|
2005
|
Kimberly S. Greene
|
Group President, Strategy and External Relations
|
45
|
2007
|
Janet C. Herrin
|
Executive Vice President, People and Performance
|
57
|
1978
|
William R. McCollum, Jr.
|
Chief Operating Officer
|
60
|
2007
|
Ralph E. Rodgers
|
Executive Vice President and General Counsel
|
57
|
1979
|
Daniel A. Traynor
|
Vice President and Chief Information Officer
|
55
|
2010
|
Preston D. Swafford
|
Executive Vice President and Chief Nuclear Officer, Nuclear Generation
|
51
|
2006
|
Robin E. Manning
|
Executive Vice President, Power System Operations
|
55
|
2008
|
Kenneth R. Breeden
|
Executive Vice President, Performance Transition Office
|
63
|
2004
|
Van M. Wardlaw
|
Executive Vice President, Customer Relations
|
51
|
1982
|
Steve Byone
|
Vice President and Controller (Principal Accounting Officer)
|
52
|
2009
|
•
|
Provide a competitive level of compensation that enables TVA to attract, retain, and motivate highly competent employees.
Total target compensation for each position in TVA is determined by market pricing based on a level needed to attract, retain, and motivate employees critical to TVA's success in achieving its mission and vision. Accordingly, total compensation levels typically are targeted at the median (50
th
percentile) of the relevant labor market for most positions. However, total compensation levels for some positions are targeted at a higher level (typically between the 50
th
and 75
th
percentile) or a lower level (typically between the 25
th
and 50
th
percentile). Higher total compensation levels are targeted for positions subject to market scarcity, recruitment and retention issues, and other business reasons. Lower total compensation levels are targeted
|
•
|
Encourage and reward executives for their performance and contributions to the successful achievement of financial and operational goals.
A key tenet of the Compensation Plan is to pay for performance by rewarding all employees for improvement in TVA's overall performance, as well as that of individual business units. The TVA Board believes that the portion of total direct compensation delivered through structured incentive compensation should increase as an employee's position and level of responsibility within TVA increases. Accordingly, executives have the highest percentage of their compensation tied to TVA and business unit performance. For the Named Executive Officers, 57 percent to 68 percent of their total target direct compensation opportunity is performance-based incentive compensation.
|
•
|
Provide executives with the focus to achieve short-term and long-term business goals that are important to TVA, TVA's customers, and the people TVA serves.
TVA seeks to hire and retain executives who are focused on both TVA's short-term and long-term success. The Compensation Plan is designed to achieve this goal by providing a mix of salary and performance-based annual and long-term incentive compensation.
|
•
|
Improve overall company performance through productivity enhancement.
An executive cannot help meet TVA's goals and improve performance without the work of others. For this reason, the performance goals set at the corporate level are the same for both executives and all non-executive employees. This generally translates into all TVA employees receiving compensation in a manner that aligns their work with the same goals and encourages and rewards them for the successful achievement of TVA's goals.
|
•
|
Specifies all compensation (such as salary or any other pay, benefits, incentives, and any other form of remuneration) for the CEO and TVA employees;
|
•
|
Is based on an annual survey of the prevailing compensation for similar positions in private industry, including engineering and electric utility companies, publicly owned electric utilities, and federal, state, and local governments; and
|
•
|
Provides that education, experience, level of responsibility, geographic differences, and retention and recruitment needs will be taken into account in determining compensation of employees.
|
•
|
The TVA Board will annually approve all compensation (such as salary or any other pay, benefits, incentives, and other form of remuneration) of all managers and technical personnel who report directly to the CEO (including any adjustment to compensation);
|
•
|
On the recommendation of the CEO, the TVA Board will approve the salaries of employees whose salaries would be in excess of Level IV of the Executive Schedule ($155,500 in 2011); and
|
•
|
The CEO will determine the salary and benefits of employees whose annual salary is not greater than Level IV of the Executive Schedule ($155,500 in 2011).
|
•
|
The TVA Board has approved compensation ranges for the direct reports to the CEO of 80 percent to 110 percent of the median total direct compensation for comparable positions, as established by benchmarking sources outside of TVA, and authorized the CEO to set or adjust compensation for the CEO's present or future direct reports within such compensation ranges, as well as to approve the parameters under which such executives may participate in certain supplemental benefit plans such as the SERP, provided that the CEO may not finally set or adjust such compensation until the Committee, or the full TVA Board, has had the opportunity to review the proposed compensation.
|
•
|
The TVA Board delegated to the Chairman of the TVA Board, in consultation with the Committee and with input from individual members of the TVA Board, the authority to evaluate and rate the performance of the CEO during the year, and the authority to approve any payout to the CEO under the Executive Annual Incentive Plan (“EAIP”) based on, among other things, the CEO's evaluated performance during the year, and delegated to the CEO, in consultation with the Committee and with input from individual members of the TVA Board, the authority to approve the individual performance goals for the CEO's direct reports and the authority to evaluate and rate the performance of the CEO's direct reports during the year.
|
•
|
Published and customized compensation surveys reflecting the relevant labor markets identified for designated positions; and
|
•
|
Publicly disclosed information from the proxy statements and annual reports on Form 10-K of energy services companies with revenues ranging from one-half to two times TVA's revenue.
|
•
|
Test target compensation level and incentive opportunity competitiveness; and
|
•
|
Determine appropriate target compensation levels and incentive opportunities to maintain the desired degree of market competitiveness.
|
Allegheny Energy, Inc.
|
Edison International*
|
Pacific Gas and Electric Co.*
|
Alliant Energy Corp.
|
El Paso Corp.
|
Pepco Holdings, Inc.*
|
Ameren Corp.*
|
Energy Future Holdings Corp.
|
Pinnacle West Capital Corp.
|
American Electric Power Co., Inc.*
|
Entergy Corp.*
|
PPL Corp.*
|
Atmos Energy Corporation
|
Exelon Corp.*
|
Progress Energy, Inc.*
|
Calpine Corp.
|
FirstEnergy Corp.*
|
Public Service Enterprise Group, Inc.*
|
CenterPoint Energy, Inc.
|
GDF SUEZ Energy North America
|
Puget Energy, Inc.
|
CMS Energy Corp.*
|
Integrys Energy Group, Inc.*
|
SCANA Corp.
|
Consolidated Edison, Inc.*
|
NextEra Energy, Inc.* (formerly FPL Group, Inc.)
|
Sempra Energy*
|
Constellation Energy Group, Inc.*
|
Northeast Utilities System*
|
The Southern Company*
|
Dominion Resources, Inc.*
|
NRG Energy, Inc.
|
Wisconsin Energy Corp.
|
Duke Energy Corp.*
|
NSTAR Electric Co.
|
Xcel Energy, Inc.*
|
DTE Energy Co. *
|
NV Energy
|
|
EAIP
Amount
|
=
|
Annual
Salary
|
X
|
Annual Target
Incentive
Opportunity
|
X
|
Percent of Corporate Goal Achievement
(0% to 150%)
|
X
|
Corporate
Modifier
(-20% to +10%)
|
•
|
Using corporate-level performance criteria that are directly aligned with TVA's mission;
|
•
|
Using a “cumulative” performance approach to measure performance achieved for three-year performance cycles;
|
•
|
Targeting award opportunities in the final year of each performance cycle at levels that approximate median levels of competitiveness with TVA's peer group and incorporating the Committee's policy of targeting that (i) approximately 80 percent of each executive's total long-term incentive opportunity be performance based (under the ELTIP) and (ii) approximately 20 percent of each executive's total long-term incentive opportunity be retention and security-oriented (under the Long-Term Deferred Compensation Plan (“LTDCP”) as described below under the heading “Long-Term Deferred Compensation”); and
|
•
|
Utilizing an award opportunity range of 50 percent to 150 percent of salary to enable payment of awards that are commensurate with performance achievements.
|
ELTIP
Payout
|
=
|
Salary
|
X
|
Target ELTIP Incentive
Opportunity
|
X
|
Percent of Opportunity
Achieved
|
NEO
|
Target Long-Term Incentive Opportunity*
|
Mr. Kilgore
|
150%
|
Mr. Thomas
|
125%
|
Mr. McCollum
|
100%
|
Ms. Greene
|
120%
|
Mr. Swafford
|
100%
|
* Represents a percent of each NEO’s salary.
|
•
|
retail rates (distributor reported retail power revenue and directly served power revenue divided by distributor reported retail sales and directly served power sales);
|
•
|
connection point interruptions (the number of interruptions of power at connection points caused by TVA's transmission system); and
|
•
|
non-fuel operations and maintenance ("O&M") costs per MWh sales (total operating and maintenance costs excluding costs included in the fuel cost adjustment formula, reagents expense, emissions allowance expense, net nuclear outage amortization/deferral expense, and energy efficiency and demand reduction spending).
|
•
|
The threshold goal was based on improvement over the last performance cycle;
|
•
|
The target goal was TVA's performance ranking in the top 25 percent of a comparison group of regional utilities composed of 23 utilities, which are subsidiaries of 15 holding companies with annual revenues greater than $3.0 billion, in the regional proximity of the TVA service territory (the “ELTIP Retail Rates Comparison Group”); and
|
•
|
The maximum goal was TVA's performance ranking in the top 10 percent of the ELTIP Retail Rates Comparison Group's performance.
|
•
|
The threshold goal was based on improvement over the last performance cycle;
|
•
|
The target goal was established based on the 50
th
percentile of the performance of a comparison group of surveyed transmission providers composed of 18 utilities, which are subsidiaries of 10 holding companies with annual revenues greater than $3.0 billion, in the regional proximity of the TVA service territory (the “ELTIP Non-Fuel O&M Comparison Group”); and
|
•
|
The maximum goal was established at the 25
th
percentile of the ELTIP Non-Fuel O&M Comparison Group's performance.
|
2011 ELTIP Payouts
|
|||||
NEO
|
Salary
|
Target ELTIP Incentive Opportunity
|
Target ELTIP Payout
|
Percent of Opportunity Achieved
|
ELTIP Payout
|
Tom Kilgore
|
$850,000
|
150%
|
$1,275,000
|
50%
|
$637,500
|
John M. Thomas, III
|
$520,000
|
125%
|
$650,000
|
50%
|
$325,000
|
William R. McCollum, Jr.
|
$745,514
|
100%
|
$745,514
|
50%
|
$372,757
|
Kimberly S. Greene
|
$650,000
|
120%
|
$780,000
|
50%
|
$390,000
|
Preston D. Swafford
|
$545,000
|
100%
|
$545,000
|
50%
|
$272,500
|
Performance Measure
|
Weight
|
Threshold
(50%)
|
Target
(100%)
|
Maximum
(150%)
|
Retail Rates
Relative Position
(1)
|
50%
|
12
th
|
8
th
|
6
th
|
System Reliability
Load Not Served
(2)
|
30%
|
7.8
|
5.9
|
3.8
|
Responsibility
Organizational Health Index
(3)
|
10%
|
55.0
|
58.0
|
61.0
|
Stakeholder Survey
(4)
|
10%
|
78.0
|
80.0
|
82.0
|
Notes
(1) Distributor reported retail power revenue and directly served power revenue divided by distributor reported retail sales and directly served power sales during this cycle. TVA compares its retail rates to the retail rates of 23 peer regional utilities, which are subsidiaries of 15 holding companies with annual revenues greater than $3.0 billion, in the regional proximity of the TVA service territory.
(2) Load Not Served, which is measured in system minutes, is equal to the product of (1) the percentage of total load not served and (2) the number of minutes in the period, and excludes events during declared major storms.
(3) The Organizational Health Index measures and tracks the organizational elements that drive TVA’s performance culture. The performance targets are based upon an improvement plan that would result in improvement from the 2009 Organizational Health Index survey (threshold), second quartile performance in 2012 (target), and mid-second quartile performance in 2012 (maximum).
(4) The Stakeholder Survey is conducted among residents, public officials, economic development leaders, and business and community leaders in the Tennessee Valley and measures the external reputation and perception of TVA in how it responds to its strategic objectives. Threshold is equal to an increase in performance by one point per year. Target is equal to a return to 2008 levels by 2012. Maximum is equal to a return to 2008 levels by 2011 and an increase over 2008 levels by 2012.
|
-
|
Cash Balance Benefit Structure (“CBBS”) for employees first hired on or after January 1, 1996, with a pension based on an account that receives pay credits equal to six percent of compensation plus interest.
|
-
|
For CBBS members, TVA provides matching contributions of 75 cents on every dollar up to 4.5 percent of annual salary.
|
Summary Compensation Table
|
|||||||||
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity Incentive Plan Compensation
($)
|
Change in Pension Value and
Nonqualified Deferred Compensation Earnings
($)
|
All Other Compensation
($)
|
Total
($)
|
Tom Kilgore
President and Chief Executive Officer
|
2011
2010
2009
|
$853,269
$853,269
$853,270
|
—
—
—
|
—
—
—
|
—
—
—
|
$1,855,010
(1)
$1,838,142
(4)
$0
|
$931,256
(2)
$595,643
(5)
$0
(6)
|
$311,025
(3)
$311,025
$310,350
|
$3,950,560
$3,598,079
$1,163,620
|
|
|
|
|
|
|
|
|
|
|
John M. Thomas, III
Chief Financial Officer
|
2011
2010
2009
|
$522,000
$410,000
—
|
—
—
—
|
—
—
—
|
—
—
—
|
$707,481
(7)
$859,376
(10)
—
|
$303,019
(8)
$177,260
(11)
—
|
$145,394
(9)
$91,381
—
|
$1,677,894
$1,538,017
—
|
|
|
|
|
|
|
|
|
|
|
William R. McCollum, Jr.
Chief Operating Officer
|
2011
2010
2009
|
$748,381
$748,381
$748,381
|
—
—
—
|
—
—
—
|
—
—
—
|
$886,524
(12)
$1,078,617
(15)
$559,136
(17)
|
$704,063
(13)
$335,712
(16)
$265,870
(18)
|
$222,770
(14)
$222,770
$222,082
|
$2,561,738
$2,385,480
$1,795,469
|
|
|
|
|
|
|
|
|
|
|
Kimberly S. Greene
Group President,
Strategy and External Relations
|
2011
2010
2009
|
$652,500
$603,942
$527,020
|
—
—
—
|
—
—
—
|
—
—
—
|
$831,324
(19)
$1,014,088
(22)
$393,750
(24)
|
$619,721
(20)
$536,376
(23)
$135,091
(25)
|
$272,770
(21)
$172,770
$172,082
|
$2,376,315
$2,327,176
$1,227,943
|
|
|
|
|
|
|
|
|
|
|
Preston D. Swafford
Executive Vice President and Chief Nuclear Officer, Nuclear Generation
|
2011
2010
2009
|
$547,865
$527,019
$499,877
|
—
—
$100,000
(31)
|
—
—
—
|
—
—
—
|
$677,070
(26)
$833,840
(29)
$558,390
(32)
|
$530,467
(27)
$325,208
(30)
$201,516
(33)
|
$195,394
(28)
$167,711
$147,082
|
$1,950,796
$1,853,778
$1,506,865
|
|
|
|
|
|
|
|
|
|
|
Notes
(1) Represents $892,510 awarded under the EAIP, $637,500 awarded under the ELTIP, and a deferred compensation credit of $325,000 provided under an incentive-based long-term deferred compensation arrangement. See information regarding the description of the arrangement under “Other Agreements.” (2) Reflects increases of $23,379 under the CBBS and $907,877 under the SERP. (3) Represents a credit in the amount of $300,000 that vests on November 30, 2011, which was provided under a LTDCP agreement with Mr. Kilgore, and $11,025 in 401(k) employer matching contributions. See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (4) Represents $881,892 awarded under the EAIP and $956,250 awarded under the ELTIP. (5) Reflects increases of $18,637 under the CBBS and $577,006 under the SERP. (6) Reflects an increase of $16,929 under the CBBS and a decrease of $133,752 under the SERP. (7) Represents $382,481 awarded under the EAIP and $325,000 awarded under the ELTIP. (8) Reflects increases of $37,077 under the CBBS and $265,942 under the SERP. (9) Represents credits totaling $100,000, $50,000 of which vested on September 30, 2011, and $50,000 of which vests on September 30, 2013, provided under two separate LTDCP agreements with Mr. Thomas, $11,745 in vehicle allowance payments, $11,025 in 401(k) employer matching contributions, $16,640 in estimated costs TVA paid for financial consulting services, and $5,984 in estimated gross-up amounts that reasonably approximate additional income and employment taxes payable as a result of TVA's payments pursuant to the Financial Counseling Services Program. See information regarding the details of the LTDCP agreements under “Long-Term Deferred Compensation Plan.” (10) Represents $371,876 awarded under the EAIP and $487,500 awarded under the ELTIP. (11) Reflects increases of $30,848 under the CBBS and $146,412 under the SERP. (12) Represents $513,767 awarded under the EAIP and $372,757 awarded under the ELTIP. (13) Represents increases of $22,704 under the CBBS and $681,359 under the SERP. (14) Represents a credit in the amount of $200,000 provided under a LTDCP agreement with Mr. McCollum that vested on September 30, 2011, $11,745 in vehicle allowance payments, and $11,025 in 401(k) employer matching contributions. See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (15) Represents $519,481 awarded under the EAIP and $559,136 awarded under the ELTIP. (16) Represents increases of $18,404 under the CBBS and $317,308 under the SERP. (17) Represents $559,136 awarded under the ELTIP. (18) Represents increases of $15,789 under the CBBS and $250,081 under the SERP. (19) Represents $441,324 awarded under the EAIP and $390,000 awarded under the ELTIP. (20) Represents increases of $35,152 under the CBBS and $584,569 under the SERP. (21) Represents credits totaling $250,000, $100,000 of which vested on September 30, 2011, and $150,000 of which vests on September 30, 2012, provided under two separate LTDCP agreements with Ms. Greene, $11,745 in vehicle allowance payments, and $11,025 in 401(k) employer matching contributions. See information regarding the details of the LTDCP agreements under “Long-Term Deferred Compensation Plan.”
(22) Represents $429,088 awarded under the EAIP and $585,000 awarded under the ELTIP.
(23) Represents increases of $27,331 under the CBBS and $509,045 under the SERP. (24) Represents $393,750 awarded under the ELTIP. |
(25) Represents increases of $20,754 under the CBBS and $114,337 under the SERP.
(26) Represents $404,570 awarded under the EAIP and $272,500 awarded under the ELTIP. (27) Represents increases of $34,027 under the CBBS and $496,440 under the SERP.
(28) Represents an annual credit in the amount of $150,000 provided under a LTDCP agreement with Mr. Swafford that vests on September 30, 2013, $11,745 in vehicle allowance payments, $11,025 in 401(k) employer matching contributions, $16,640 in estimated costs TVA paid for financial consulting services, and $5,984 in estimated gross-up amounts that reasonably approximate additional income and employment taxes payable as a result of TVA's payments pursuant to the Financial Counseling Services Program. See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.”
(29) Represents $440,090 awarded under the EAIP and $393,750 awarded under the ELTIP.
(30) Represents increases of $28,526 under the CBBS and $296,682 under the SERP.
(31) Represents a lump sum performance payment awarded for an improved nuclear power industry peer evaluation of Watts Bar Nuclear Plant in 2009.
(32) Represents $164,640 awarded under the EAIP and $393,750 awarded under the ELTIP.
(33) Represents increases of $27,674 under the CBBS and $173,842 under the SERP.
|
Pension Benefits Table
|
||||
Name
|
Plan Name
|
Number of
Years of Credited Service
(1)
(#)
|
Present Value of Accumulated Benefit
($)
|
Payments During Last Year
($)
|
|
|
|
|
|
Tom Kilgore
|
(1) Qualified Plan – CBBS
(2) Non-Qualified – SERP Tier 1
|
6.58
9.58
(2)
|
$95,745
$3,329,935
|
$0
$0
|
John M. Thomas, III
|
(1) Qualified Plan – CBBS
(2) Non-Qualified – SERP Tier 1
|
5.83
5.83
|
$126,734
$453,793
|
$0
$0
|
William R. McCollum, Jr.
|
(1) Qualified Plan – CBBS
(2) Non-Qualified – SERP Tier 1
|
4.42
14.42
(3)
|
$73,103
$3,385,399
|
$0
$0
|
Kimberly S. Greene
|
(1) Qualified Plan – CBBS
(2) Non-Qualified – SERP Tier 1
|
4.08
19.08
(4)
|
$98,364
$1,659,283
|
$0
$0
|
Preston D. Swafford
|
(1) Qualified Plan – CBBS
(2) Non-Qualified – SERP Tier 1
|
5.42
10.42
(5)
|
$119,442
$1,335,973
|
$0
$0
|
|
|
|
|
|
Notes
(1) Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below.
(2) Mr. Kilgore has been granted three additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits associated with the additional three years of credited service has been waived. In addition, the offset for benefits provided under TVA's defined benefit plan will be calculated based on the actual pension benefit he will receive as a participant in the CBBS.
(3) Mr. McCollum has been granted 10 additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits has been waived. The additional years of credited service will be used for SERP benefit calculation purposes only and will not count toward the minimum five-year vesting requirement. In the event Mr. McCollum voluntarily terminates his employment with TVA or is terminated for cause prior to satisfying the minimum five-year vesting requirement, no benefits will be provided under the SERP. In the event of termination for any other reason, prior to five years of employment, the five-year vesting requirement will be waived as long as the termination is considered acceptable to TVA, and Mr. McCollum will be eligible to receive benefits payable in five annual installments following termination. The present value of this benefit as of September 30, 2011, is $3,385,399. Without waiving the vesting requirement and granting the additional years of credited service, the present value of Mr. McCollum's accumulated benefit would be $0.
(4) Ms. Greene has been granted 15 additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits has been waived. The offset for benefits provided under TVA's defined benefit plan will be calculated based on the benefit she will be eligible to receive as a participant in the CBBS taking into account the additional years of credited service being used for SERP benefit calculation purposes. In the event that Ms. Greene voluntarily terminates her employment with TVA or is terminated for cause prior to satisfying the minimum five-year vesting requirement, no benefits will be provided under the SERP. In the event of termination for any other reason, prior to five years of employment, the five-year vesting requirement will be waived and the benefit Ms. Greene will be eligible to receive will be payable no earlier than age 55. As of September 30, 2011, the present value of this benefit is $1,659,283. Without the additional years of credited service, the present value of Ms. Greene's accumulated benefit would be $0.
(5) Mr. Swafford has been granted five additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits has been waived. The additional years of credited service will be used for SERP benefit calculation purposes. In addition, the offset for benefits provided under TVA's defined benefit plan will be calculated based on the benefit he would be eligible to receive as a participant in the CBBS taking into account the additional years of credited service being used for SERP benefit calculation purposes. The present value of this benefit as of September 30, 2011, is $1,335,973.
|
1.
|
For purposes of this policy, “financial interest” means an interest of a person, or of a person’s spouse or minor child, arising by virtue of investment or credit relationship, ownership, employment, consultancy, or fiduciary relationship such as director, trustee, or partner. However, financial interest does not include an interest in TVA or any interest:
|
•
|
comprised solely of a right to payment of retirement benefits resulting from former employment or fiduciary relationship;
|
•
|
arising solely by virtue of cooperative membership or similar interest as a consumer in a distributor of TVA power; or
|
•
|
arising by virtue of ownership of publicly traded securities in any single entity with a value of $25,000 or less, or within a diversified mutual fund investment in any amount.
|
2.
|
Directors and the Chief Executive Officer shall not hold a financial interest in any distributor of TVA power.
|
3.
|
Directors and the Chief Executive Officer shall not hold a financial interest in any entity engaged in the wholesale or retail generation, transmission, or sale of electricity.
|
4.
|
Directors and the Chief Executive Officer shall not hold a financial interest in any entity that may reasonably be perceived as likely to be adversely affected by the success of TVA as a producer or transmitter of electric power.
|
5.
|
Any action taken or interest held that creates, or may reasonably be perceived as creating, a conflict of interest restricted by this additional policy applicable to TVA Directors and the Chief Executive Officer should immediately be disclosed
to the Chairman of Board of Directors and the Chairman of the Audit, Governance, and Ethics Committee (now the Audit, Risk, and Regulation Committee). The Audit, Governance, and Ethics Committee (now the Audit, Risk, and Regulation Committee) shall b
e responsible for initially reviewing all such disclosures and making recommendations to the entire Board on what action, if any, should be taken. The entire Board, without the vote of any Director(s) involved, shall determine the appropriate action to be taken.
|
6.
|
Any waiver of this additional policy applicable to TVA Directors and the Chief Executive Officer may be made only by the Board, and will be disclosed promptly to the public, subject to the limitations on disclosure imposed by law.
|
•
|
The aggregate amount of all such non-audit services provided to TVA does not exceed five percent of the total amount TVA pays the external auditor during the fiscal year in which the non-audit services are provided;
|
•
|
Such services were not recognized by TVA at the time of the engagement to be non-audit services or non-audit related services; and
|
•
|
Such services are promptly brought to the attention of the Audit, Risk, and Regulation Committee and approved at the next scheduled Audit, Risk, and Regulation Committee meeting or by one or more members of the Audit, Risk, and Regulation Committee to whom the authority to grant such approvals has been delegated.
|
•
|
Bookkeeping or other services related to the accounting records or financial statements of TVA;
|
•
|
Financial information system design and implementation;
|
•
|
Appraisal or valuation services, fairness opinions, and contribution-in-kind reports;
|
•
|
Actuarial services;
|
•
|
Internal audit outsourcing services;
|
•
|
Management functions or human resources;
|
•
|
Broker or dealer, investment adviser, or investment banking services;
|
•
|
Legal services and expert services unrelated to the audit; and
|
•
|
Any other services that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.
|
10.14
|
Supplement No. 2 Dated as of September 30, 2008, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.17 to TVA's Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)
|
|
|
10.15
|
Supplement No. 3 Dated as of April 17, 2009, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.15 to TVA's Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313).
|
|
|
10.16
|
Supplement No. 4 Dated as of April 22, 2010, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.17
|
Lease Agreement Dated as of September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.18 to TVA's Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)
|
|
|
10.18
|
First Amendment Dated as of April 17, 2009, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.17 to TVA's Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.19
|
Second Amendment Dated as of April 22, 2010, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.3 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.20
|
Amended and Restated Buy-Back Arrangements Dated as of April 22, 2010, Among TVA, JPMorgan Chase Bank, National Association, as Administrative Agent and a Lender, and the Other Lenders Referred to Therein (Incorporated by reference to Exhibit 10.4 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.21
|
Overview of TVA's September 26, 2003, Lease and Leaseback of Control, Monitoring, and Data Analysis Network with Respect to TVA's Transmission System in Tennessee, Kentucky, Georgia, and Mississippi (Incorporated by reference to Exhibit 10.9 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.22*
|
Participation Agreement Dated as of September 22, 2003, Among (1) TVA, (2) NVG Network I Statutory Trust, (3) Wells Fargo Delaware Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Owner Trustee, (4) Wachovia Mortgage Corporation, (5) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Lease Indenture Trustee, and (6) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Pass Through Trustee (Incorporated by reference to Exhibit 10.10 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.23*
|
Network Lease Agreement Dated as of September 26, 2003, Between NVG Network I Statutory Trust, as Owner Lessor, and TVA, as Lessee (Incorporated by reference to Exhibit 10.11 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.24*
|
Head Lease Agreement Dated as of September 26, 2003, Between TVA, as Head Lessor, and NVG Network I Statutory Trust, as Head Lessee (Incorporated by reference to Exhibit 10.12 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.25*
|
Leasehold Security Agreement Dated as of September 26, 2003, Made by NVG Network I Statutory Trust to TVA (Incorporated by reference to Exhibit 10.13 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.26*
|
Federal Facilities Compliance Agreement Between the United States Environmental Protection Agency and TVA (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, File No. 000-52313)
|
|
|
10.27*
|
Consent Decree among Alabama, Kentucky, North Carolina, Tennessee, the Alabama Department of Environmental Management, the National Parks Conservation Association, Inc., the Sierra Club, Our Children's Earth Foundation, and TVA (Incorporated by reference to Exhibit 10.3 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, File No. 000-52313)
|
|
|
10.28†
|
TVA Compensation Plan Approved by the TVA Board on May 31, 2007 (Incorporated by reference to Exhibit 99.3 to TVA's Current Report on Form 8-K filed on December 11, 2007, File No. 000-52313)
|
|
|
10.29†
|
TVA Vehicle Allowance Guidelines, Effective April 1, 2006 (Incorporated by reference to Exhibit 10.18 to TVA's Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.30†
|
Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.1 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.31†
|
Amendment Dated as of August 16, 2011, to Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.1 to TVA’s Current Report on Form 8-K filed on August 22, 2011, File No. 000-52313)
|
|
|
10.32†
|
Executive Annual Incentive Plan (Incorporated by reference to Exhibit 10.3 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.33†
|
Executive Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.4 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.34†
|
Long-Term Deferred Compensation Plan (Incorporated by reference to Exhibit 10.5 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.35†
|
Deferred Compensation Plan (Incorporated by reference to Exhibit 10.2 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.36†
|
Overview of Financial Counseling Services Program (Incorporated by reference to Exhibit 10.31 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.37†
|
Offer Letter to Tom Kilgore Accepted as of January 19, 2005 (Incorporated by reference to Exhibit 10.19 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.38†
|
Offer Letter to William R. McCollum, Jr., Accepted as of March 9, 2007 (Incorporated by reference to Exhibit 10.26 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.39†
|
Offer Letter to Kimberly S. Greene Accepted as of August 3, 2007 (Incorporated by reference to Exhibit 10.27 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.40†
|
First Deferral Agreement Between TVA and Tom Kilgore Dated as of March 29, 2005 (Incorporated by reference to Exhibit 10.24 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.41†
|
Second Deferral Agreement Between TVA and Tom Kilgore Dated as of November 24, 2009 (Incorporated by reference to Exhibit 10.39 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.42†
|
First Deferral Agreement Between TVA and John M. Thomas, III, Dated as of December 4, 2009 (Incorporated by reference to Exhibit 10.7 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.43†
|
Second Deferral Agreement Between TVA and John M. Thomas, III, Dated as of September 27, 2010 (Incorporated by reference to Exhibit 10.40 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2010, File No. 000-52313)
|
|
|
10.44†
|
Deferral Agreement Between TVA and William R. McCollum, Jr., Dated as of May 3, 2007 (Incorporated by reference to Exhibit 10.33 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.45†
|
First Deferral Agreement Between TVA and Kimberly S. Greene Dated as of September 4, 2007 (Incorporated by reference to Exhibit 10.34 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.46†
|
Second Deferral Agreement Between TVA and Kimberly S. Greene Dated as of December 20, 2008 (Incorporated by reference to Exhibit 10.43 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.47†
|
First Deferral Agreement Between TVA and Preston D. Swafford Dated as of May 10, 2006 (Incorporated by reference to Exhibit 10.44 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.48†
|
Second Deferral Agreement Between TVA and Preston D. Swafford Dated as of December 23, 2010 (Incorporated by reference to Exhibit 10.4 to TVA’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010, File No. 000-52313)
|
|
|
14
|
Disclosure and Financial Ethics Code (Incorporated by reference to Exhibit 14 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Executive Officer
|
|
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Financial Officer
|
|
|
32.1
|
Section 1350 Certification Executed by the Chief Executive Officer
|
|
|
32.2
|
Section 1350 Certification Executed by the Chief Financial Officer
|
|
|
101.INS**
|
TVA XBRL Instance Document
|
Date:
|
November 17, 2011
|
|
TENNESSEE VALLEY AUTHORITY
|
|
|
|
(Registrant)
|
|
|
By:
|
/s/ Tom Kilgore
|
|
|
|
Tom Kilgore
|
|
|
|
President and Chief Executive Officer
|
Signature
|
Title
|
Date
|
|
|
|
|
|
|
|
|
|
/s/ Tom Kilgore
|
President and Chief Executive Officer
|
November 17, 2011
|
Tom Kilgore
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ John M. Thomas, III
|
Chief Financial Officer
|
November 17, 2011
|
John M. Thomas, III
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Steve Byone
|
Vice President and Controller
|
November 17, 2011
|
Steve Byone
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Dennis C. Bottorff
|
Chairman and Director
|
November 17, 2011
|
Dennis C. Bottorff
|
|
|
|
|
|
|
|
|
/s/ Marilyn A. Brown
|
Director
|
November 17, 2011
|
Marilyn A. Brown
|
|
|
|
|
|
|
|
|
/s/ Robert M. Duncan
|
Director
|
November 17, 2011
|
Robert M. Duncan
|
|
|
|
|
|
|
|
|
/s/ Thomas C. Gilliland
|
Director
|
November 17, 2011
|
Thomas C. Gilliland
|
|
|
|
|
|
|
|
|
/s/ Richard C. Howorth
|
Director
|
November 17, 2011
|
Richard C. Howorth
|
|
|
|
|
|
|
|
|
/s/ Bishop William H. Graves
|
Director
|
November 17, 2011
|
Bishop William H. Graves
|
|
|
|
|
|
|
|
|
/s/ Barbara S. Haskew
|
Director
|
November 17, 2011
|
Barbara S. Haskew
|
|
|
|
|
|
|
|
|
/s/ Neil G. McBride
|
Director
|
November 17, 2011
|
Neil G. McBride
|
|
|
|
|
|
|
|
|
/s/ William B. Sansom
|
Director
|
November 17, 2011
|
William B. Sansom
|
|
|
|
|
|
|
|
|
10.14
|
Supplement No. 2 Dated as of September 30, 2008, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.17 to TVA's Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)
|
|
|
10.15
|
Supplement No. 3 Dated as of April 17, 2009, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.15 to TVA's Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313).
|
|
|
10.16
|
Supplement No. 4 Dated as of April 22, 2010, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.17
|
Lease Agreement Dated as of September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.18 to TVA's Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)
|
|
|
10.18
|
First Amendment Dated as of April 17, 2009, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.17 to TVA's Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.19
|
Second Amendment Dated as of April 22, 2010, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.3 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.20
|
Amended and Restated Buy-Back Arrangements Dated as of April 22, 2010, Among TVA, JPMorgan Chase Bank, National Association, as Administrative Agent and a Lender, and the Other Lenders Referred to Therein (Incorporated by reference to Exhibit 10.4 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.21
|
Overview of TVA's September 26, 2003, Lease and Leaseback of Control, Monitoring, and Data Analysis Network with Respect to TVA's Transmission System in Tennessee, Kentucky, Georgia, and Mississippi (Incorporated by reference to Exhibit 10.9 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.22*
|
Participation Agreement Dated as of September 22, 2003, Among (1) TVA, (2) NVG Network I Statutory Trust, (3) Wells Fargo Delaware Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Owner Trustee, (4) Wachovia Mortgage Corporation, (5) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Lease Indenture Trustee, and (6) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Pass Through Trustee (Incorporated by reference to Exhibit 10.10 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.23*
|
Network Lease Agreement Dated as of September 26, 2003, Between NVG Network I Statutory Trust, as Owner Lessor, and TVA, as Lessee (Incorporated by reference to Exhibit 10.11 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.24*
|
Head Lease Agreement Dated as of September 26, 2003, Between TVA, as Head Lessor, and NVG Network I Statutory Trust, as Head Lessee (Incorporated by reference to Exhibit 10.12 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.25*
|
Leasehold Security Agreement Dated as of September 26, 2003, Made by NVG Network I Statutory Trust to TVA (Incorporated by reference to Exhibit 10.13 to TVA's Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.26*
|
Federal Facilities Compliance Agreement Between the United States Environmental Protection Agency and TVA (Incorporated by reference to Exhibit 10.2 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, File No. 000-52313)
|
|
|
10.27*
|
Consent Decree among Alabama, Kentucky, North Carolina, Tennessee, the Alabama Department of Environmental Management, the National Parks Conservation Association, Inc., the Sierra Club, Our Children's Earth Foundation, and TVA (Incorporated by reference to Exhibit 10.3 to TVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, File No. 000-52313)
|
|
|
10.28†
|
TVA Compensation Plan Approved by the TVA Board on May 31, 2007 (Incorporated by reference to Exhibit 99.3 to TVA's Current Report on Form 8-K filed on December 11, 2007, File No. 000-52313)
|
|
|
10.29†
|
TVA Vehicle Allowance Guidelines, Effective April 1, 2006 (Incorporated by reference to Exhibit 10.18 to TVA's Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.30†
|
Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.1 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.31†
|
Amendment Dated as of August 16, 2011, to Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.1 to TVA’s Current Report on Form 8-K filed on August 22, 2011, File No. 000-52313)
|
|
|
10.32†
|
Executive Annual Incentive Plan (Incorporated by reference to Exhibit 10.3 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.33†
|
Executive Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.4 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.34†
|
Long-Term Deferred Compensation Plan (Incorporated by reference to Exhibit 10.5 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.35†
|
Deferred Compensation Plan (Incorporated by reference to Exhibit 10.2 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)
|
|
|
10.36†
|
Overview of Financial Counseling Services Program (Incorporated by reference to Exhibit 10.31 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.37†
|
Offer Letter to Tom Kilgore Accepted as of January 19, 2005 (Incorporated by reference to Exhibit 10.19 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.38†
|
Offer Letter to William R. McCollum, Jr., Accepted as of March 9, 2007 (Incorporated by reference to Exhibit 10.26 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.39†
|
Offer Letter to Kimberly S. Greene Accepted as of August 3, 2007 (Incorporated by reference to Exhibit 10.27 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.40†
|
First Deferral Agreement Between TVA and Tom Kilgore Dated as of March 29, 2005 (Incorporated by reference to Exhibit 10.24 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
10.41†
|
Second Deferral Agreement Between TVA and Tom Kilgore Dated as of November 24, 2009 (Incorporated by reference to Exhibit 10.39 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.42†
|
First Deferral Agreement Between TVA and John M. Thomas, III, Dated as of December 4, 2009 (Incorporated by reference to Exhibit 10.7 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)
|
|
|
10.43†
|
Second Deferral Agreement Between TVA and John M. Thomas, III, Dated as of September 27, 2010 (Incorporated by reference to Exhibit 10.40 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2010, File No. 000-52313)
|
|
|
10.44†
|
Deferral Agreement Between TVA and William R. McCollum, Jr., Dated as of May 3, 2007 (Incorporated by reference to Exhibit 10.33 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.45†
|
First Deferral Agreement Between TVA and Kimberly S. Greene Dated as of September 4, 2007 (Incorporated by reference to Exhibit 10.34 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)
|
|
|
10.46†
|
Second Deferral Agreement Between TVA and Kimberly S. Greene Dated as of December 20, 2008 (Incorporated by reference to Exhibit 10.43 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.47†
|
First Deferral Agreement Between TVA and Preston D. Swafford Dated as of May 10, 2006 (Incorporated by reference to Exhibit 10.44 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)
|
|
|
10.48†
|
Second Deferral Agreement Between TVA and Preston D. Swafford Dated as of December 23, 2010 (Incorporated by reference to Exhibit 10.4 to TVA’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2010, File No. 000-52313)
|
|
|
14
|
Disclosure and Financial Ethics Code (Incorporated by reference to Exhibit 14 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)
|
|
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Executive Officer
|
|
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Financial Officer
|
|
|
32.1
|
Section 1350 Certification Executed by the Chief Executive Officer
|
|
|
32.2
|
Section 1350 Certification Executed by the Chief Financial Officer
|
|
|
101.INS**
|
TVA XBRL Instance Document
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of the Tennessee Valley Authority;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
November 17, 2011
|
By:
|
/s/ Tom Kilgore
|
|
|
|
Tom Kilgore
|
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of the Tennessee Valley Authority;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
November 17, 2011
|
By:
|
/s/ John M. Thomas, III
|
|
|
|
John M. Thomas, III
|
|
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Chief Financial Officer
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(1)
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the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Tom Kilgore
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Tom Kilgore
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President and Chief Executive Officer
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November 17, 2011
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(1)
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the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ John M. Thomas, III
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John M. Thomas, III
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Chief Financial Officer
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November 17, 2011
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