FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K for the fiscal year ended September 30, 2021 ("Annual Report") contains forward-looking statements relating to future events and future performance. All statements other than those that are purely historical may be forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as "may," "will," "should," "expect," "anticipate," "believe," "intend," "project," "plan," "predict," "assume," "forecast," "estimate," "objective," "possible," "probably," "likely," "potential," "speculate," the negative of such words, or other similar expressions.

Although the Tennessee Valley Authority ("TVA") believes that the assumptions underlying any forward-looking statements are reasonable, TVA does not guarantee the accuracy of these statements. Numerous factors could cause actual results to differ materially from those in any forward-looking statements. These factors include, among other things:

•The continuing impact of the Coronavirus Disease 2019 ("COVID-19") pandemic on TVA's operating results, financial condition, and cash flows, the demand for electricity, TVA's workforce and operations, the availability of fuel and critical parts, supplies, and services, the financial markets, and the business and financial condition of TVA's customers and counterparties;

•The duration and severity of the COVID-19 pandemic, actions taken to contain its spread and mitigate its effects, and broader impacts of the COVID-19 pandemic on economic and market conditions, including impacts on interest rates, commodity prices, investment performance, and foreign currency exchange rates;

•New, amended, or existing laws, regulations, executive orders ("EOs"), or administrative orders or interpretations, including those related to climate change and other environmental matters, and the costs of complying with these laws, regulations, EOs, or administrative orders or interpretations;

•The cost of complying with known, anticipated, or new emissions reduction requirements, some of which could render continued operation of many of TVA's aging coal-fired generation units not cost-effective or result in their removal from service, perhaps permanently;

•Significant reductions in demand for electricity produced through non-renewable or centrally located generation sources that may result from, among other things, economic downturns, increased energy efficiency and conservation, increased utilization of distributed generation and microgrids, and improvements in alternative generation and energy storage technologies;

•Changes in customer preferences for energy produced from cleaner generation sources;

•Changes in technology;

•Actions taken, or inaction, by the United States ("U.S.") government relating to the national or TVA debt ceiling or automatic spending cuts in government programs;

•Costs or liabilities that are not anticipated in TVA's financial statements for third-party claims, natural resource damages, environmental ~~clean-up~~cleanup activities, or fines or penalties associated with unexpected events such as failures of a facility or infrastructure;

•Addition or loss of customers by TVA or ~~the~~TVA's local power company customers ("LPCs");

•Significant delays, cost increases, or cost overruns associated with the construction and maintenance of generation, transmission, navigation, flood control, or related assets;

•Requirements or decisions changing the amount or timing of funding obligations associated with TVA's pension plans, other post-retirement benefit plans, or health care plans;

•Increases in TVA's financial liabilities for decommissioning its nuclear facilities or retiring other assets;

•Risks associated with the operation of nuclear facilities or other generation and related facilities, including coal combustion ~~residual~~residuals ("CCR") facilities;

•Physical attacks on TVA's assets;

•Cyber attacks on TVA's assets or the assets of third parties upon which TVA relies;

•The outcome of legal or administrative proceedings;

•The failure of TVA's generation, transmission, navigation, flood control, and related assets and infrastructure, including CCR facilities and spent nuclear fuel storage facilities, to operate as anticipated, resulting in lost revenues, damages, or other costs that are not reflected in TVA's financial statements or projections;

•Differences between estimates of revenues and expenses and actual revenues earned and expenses incurred;

•Weather ~~conditions;~~conditions including changing weather patterns, extreme weather conditions, and other events such as flooding, droughts, wildfires, and snow or ice storms that may result from climate change;

•Catastrophic events such as fires, earthquakes, explosions, solar events, electromagnetic pulses ("~~EMP"~~EMPs"), geomagnetic disturbances, ~~("GMDs"),~~ droughts, floods, hurricanes, tornadoes, or other casualty events or pandemics, wars, national emergencies, terrorist activities, or other similar events, especially if these events occur in or near TVA's service area;

•Events at a TVA facility, which, among other things, could result in loss of life, damage to the environment, damage to or loss of the facility, and damage to the property of others;

•Events or changes involving transmission lines, dams, and other facilities not operated by TVA, including those that affect the reliability of the interstate transmission grid of which TVA's transmission system is a part and those that increase flows across TVA's transmission grid;

•Disruption of fuel supplies, which may result from, among other things, economic conditions, weather conditions, production or transportation difficulties, labor challenges, cyber attacks, mine closures or reduced mine production, an increase in fuel exports, or environmental laws or regulations affecting TVA's fuel suppliers or transporters;

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•Purchased power price volatility and disruption of purchased power supplies;

•Events which affect the supply of water for TVA's generation facilities;

•Changes in TVA's determinations of the appropriate mix of generation assets;

•Ineffectiveness of TVA's efforts at adapting its organization to an evolving marketplace and remaining cost competitive;

•Inability to use regulatory accounting or loss of regulatory accounting approval for certain costs;

•Inability to obtain, or loss of, regulatory approval for the construction or operation of assets;

•The requirement or decision to make additional contributions to TVA's Nuclear Decommissioning Trust ("NDT") or Asset Retirement Trust ("ART");

•Limitations on TVA's ability to borrow money which may result from, among other things, TVA's approaching or substantially reaching the limit on bonds, notes, and other evidences of indebtedness (collectively, "Bonds") specified in the Tennessee Valley Authority Act of 1933, ~~(the "TVA~~as amended ("TVA Act");

•An increase in TVA's cost of capital that may result from, among other things, changes in the market for TVA's debt securities, changes in the credit rating of TVA or the U.S. government, or, potentially, an increased reliance by TVA on alternative financing should TVA approach its debt limit;

•Changes in the economy and volatility in financial markets;

•Reliability or creditworthiness of counterparties;

•Changes in the market price of commodities such as coal, uranium, natural gas, fuel oil, crude oil, construction materials, reagents, electricity, or emission allowances;

•Changes in the market price of equity securities, debt securities, or other investments;

•Changes in interest rates, currency exchange rates, or inflation rates;

•Ineffectiveness of TVA's disclosure controls and procedures or its internal control over financial reporting;

•Inability to eliminate identified deficiencies in TVA's systems, standards, controls, or corporate culture;

•Inability to attract or retain a skilled workforce;

•Inability to respond quickly enough to current or potential customer demands or needs;

•Events at a nuclear facility, whether or not operated by or licensed to TVA, which, among other things, could lead to increased regulation or restriction on the construction, ownership, operation, or decommissioning of nuclear facilities or on the storage of spent fuel, obligate TVA to pay retrospective insurance premiums, reduce the availability and affordability of insurance, increase the costs of operating TVA's existing nuclear units, or cause TVA to forego future construction at these or other facilities;

•Loss of quorum of the TVA Board of Directors ~~(the "TVA~~("TVA Board");

•Changes in the priorities of the TVA Board or TVA senior management; or

•Other unforeseeable events.

See also Item 1A, Risk Factors, and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. New factors emerge from time to time, and it is not possible for ~~management~~TVA to predict all such factors or to assess the extent to which any factor, or combination of factors, may impact TVA's business or cause results to differ materially from those contained in any forward-looking statement. TVA undertakes no obligation to update any forward-looking statement to reflect developments that occur after the statement is made.

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GENERAL INFORMATION

Fiscal Year

References to years ~~(2019, 2018,~~(2021, 2020, etc.) in this Annual Report on Form 10-K for the fiscal year ended September 30, 2021are to TVA's fiscal years ending September 30 except for references to years in the biographical information about directors and executive officers in Item 10, Directors, Executive Officers and Corporate Governance, as well as to years that are preceded by "CY," which references are to calendar years.

Notes

References to "Notes" are to the Notes to Consolidated Financial Statements contained in Item 8, Financial Statements and Supplementary Data in this Annual Report.

Property

TVA does not own real property and real property interests (collectively, "real property"). TVA acquires real property in the name of the United States ("U.S."), and such legal title in real property is entrusted to TVA as the agent of the ~~United States~~U.S. to accomplish the purposes of the TVA Act. TVA acquires personal property in the name of TVA. Accordingly, unless the context indicates the reference is to TVA's personal property, any statement in this Annual Report referring to TVA property shall be read as referring to the real property of the ~~United States~~U.S. that has been entrusted to TVA as its agent.

Available Information

TVA files annual, quarterly, and current reports with the Securities and Exchange Commission ("SEC") under Section 37 of the Securities Exchange Act of ~~1934.~~1934 (the "Exchange Act"). TVA's SEC filings are available to the public on the SEC's website at www.sec.gov or on TVA's website at www.tva.gov. Information contained on or accessible through TVA's website shall not be deemed to be incorporated into, or to be a part of, this Annual ~~Report.~~Report or any other report or document that TVA files with the SEC.

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PART I

ITEM 1. BUSINESS

The Corporation

General

The Tennessee Valley Authority ("TVA") is a corporate agency and instrumentality of the United States ("U.S.") that was created in 1933 by federal legislation in response to a proposal by President Franklin D. Roosevelt. TVA was created to, among other things, improve navigation on the Tennessee River, reduce the damage from destructive flood waters within the Tennessee River system and downstream on the lower Ohio and Mississippi Rivers, further the economic development of TVA's service area in the southeastern ~~United States,~~U.S., and sell the electricity generated at the facilities TVA operates. Today, TVA operates the nation's largest public power system and supplies power to a population of ~~nearly~~approximately 10 million people.

TVA also manages the Tennessee River, its tributaries, and certain shorelines to provide, among other things, year-round navigation, flood damage reduction, and affordable and reliable electricity. Consistent with these primary purposes, TVA also manages the river system to provide recreational opportunities, adequate water supply, improved water quality, cultural and natural resource protection, and economic development. TVA performs these management duties in cooperation with other federal and state agencies that have jurisdiction and authority over certain aspects of the river system. In addition, the TVA Board of Directors ~~(the "TVA~~("TVA Board") has established two councils — the Regional Resource Stewardship Council and the Regional Energy Resource Council — to advise TVA on its stewardship activities in the Tennessee Valley and its energy resource activities.

Initially, all TVA operations were funded by federal appropriations. Direct appropriations for the TVA power program ended in 1959, and appropriations for TVA's stewardship, economic development, and multipurpose activities ended in 1999. Since 1999, TVA has funded all of its operations almost entirely from the sale of electricity and power system financings. TVA's power system financings consist primarily of the sale of bonds, notes, or other evidences of indebtedness (collectively, "Bonds") and secondarily of alternative forms of financing, such as lease arrangements. As a wholly-owned government corporation, TVA is not authorized to issue equity securities.

TVA's Mission of Service

TVA was built for the people, created by federal legislation, and charged with a unique mission - to improve the quality of life in a seven-state region through the integrated management of the region's resources. TVA's mission focuses on three key areas:

•Energy — Delivering reliable, low cost, clean energy;

•Environment — Caring for the region's natural resources; and

•Economic Development — Creating sustainable economic growth.

TVA's Strategic Priorities

While TVA's mission has not changed since it was established in 1933, the climate in which TVA operates continues to evolve. To continue to deliver its mission of service while evolving for future success, TVA must realize five strategic priorities:

•Powerful Partnerships — Promoting progress through the shared success of TVA's customers and stakeholders;

•People Advantage — Amplifying the energy, passion, and creativity within each TVA employee;

•Operational Excellence — Building on TVA's best-in-class reputation for reliable service and competitively priced power;

•Igniting Innovation — Pursuing innovative solutions for TVA and its customers and communities; and

•Financial Strength — Investing in the future, while keeping energy costs as low as possible.

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Service Area

TVA's service area, the area in which it sells power, is defined by the Tennessee Valley Authority Act of 1933, as amended ("TVA ~~Act.~~Act"). TVA supplies power in most of Tennessee, northern Alabama, northeastern Mississippi, and southwestern Kentucky, and in portions of northern Georgia, western North Carolina, and southwestern Virginia. Under the TVA Act, subject to certain minor exceptions, TVA may not, without the enactment of authorizing federal legislation, enter into contracts that would have the effect of making it, or the wholesale customers that distribute TVA power ("local power company customers" or "LPCs"), a source of power supply outside the area for which TVA or its LPCs were the primary source of power supply on July 1, 1957. This provision is referred to as the "fence" because it bounds TVA's sales activities, essentially limiting TVA to power sales within a defined service area.

Note

See Power Supply and Load Management Resources.

In addition, the Federal Power Act ("FPA") includes a provision that helps protect TVA's ability to sell power within its service area. This provision, called the "anti-cherrypicking" provision, prevents the Federal Energy Regulatory Commission ("FERC") from ordering TVA to provide access to its transmission lines to others to deliver power to customers within TVA's defined service area. As a result, the anti-cherrypicking provision reduces TVA's exposure to loss of its customers. However, there have been some efforts to circumvent the anti-cherrypicking provision, and the protection of the provision could be limited and perhaps eliminated by federal legislation at some time in the future. See Competition, Item 1A, Risk Factors — Regulatory, Legislative, and Legal Risks— TVA may lose its protected service territory, and Note 23 — Commitments and Contingencies — Legal Proceedings — Challenge to Anti-Cherrypicking Amendment.

In ~~2019,~~2021, the revenues generated from TVA's electricity sales were ~~$11.2~~$10.4 billion and accounted for virtually all of TVA's revenues. See Note 1718 — Revenue for details regarding revenues by state for each of the last three years.

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COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the Coronavirus Disease 2019 ("COVID-19") to be a pandemic, which continues to be a serious challenge throughout the U.S. TVA implemented a company-wide pandemic plan to address specific aspects of the COVID-19 pandemic, including impacts from variants. TVA's pandemic plan continually evolves based on medical guidance and federal, regional, and local requirements and guidelines.

TVA has put in place measures to protect its workforce, stakeholders, and critical operations, such as extending the timeframe for workforce reintegration and continuing to implement strong physical and cybersecurity measures. Generation, transmission, and distribution functions are actively monitored, and TVA's operations and delivery of energy to customers have not been materially impacted by the COVID-19 pandemic at this time. While TVA experienced a reduction in revenue for the year ended September 30, 2020, based on current internal models, TVA estimates that the COVID-19 pandemic had little impact on TVA's sales volume for the year ended September 30, 2021. TVA continues to assess potential supplier risk, and through September 30, 2021, TVA has seen an increase in supplier impacts as a result of COVID-19, such as delays and price fluctuations, but has not experienced significant business disruptions at this time.

The COVID-19 pandemic has also created economic uncertainty for TVA's LPCs and the communities they serve. To support LPCs and strengthen the public power response to the COVID-19 pandemic, TVA created initiatives such as the Public Power Support and Stabilization Program, Back-to-Business Credit Program, Community Care Fund, and Pandemic Credits. TVA has also provided regulatory flexibility for LPCs to halt disconnection of services.

The COVID-19 pandemic is an evolving situation, and TVA will continue to monitor and adjust its response as necessary to ensure reliable service while protecting the safety and health of its workforce. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives — COVID-19 Pandemic for an expanded discussion of the impact to TVA and related initiatives.

Customers

TVA is primarily a wholesaler of power, selling power to LPCs that then resell power to their customers at retail rates. TVA's LPCs consist of (1) municipalities and other local government entities ("municipalities") and (2) customer-owned entities ("cooperatives"). These municipalities and cooperatives operate public power electric systems whose primary purpose is not to make a profit but to supply electricity to the general public or the cooperatives' members. TVA also sells power directly to certain end-use customers, primarily large commercial and industrial loads and federal agencies with loads larger than 5,000 kilowatts ("kW"). Whether TVA or an LPC serves a new power customer is determined by the applicable TVA-LPC wholesale power contract. Each contract contains a formula that balances the size of the LPC and the amount of any TVA infrastructure investment to determine which party is entitled to serve the new customer. In addition, power in excess of the needs of the TVA system may, where consistent with the provisions of the ~~Tennessee Valley Authority~~TVA Act, ~~of 1933 (the "TVA Act"),~~ be sold under exchange power arrangements with other specific electric systems. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Financial Results — Operating Revenues~~. See~~and Note 1718 — Revenue for details regarding operating revenues for each of the last three years.

Local Power ~~Companies~~Company Customers

Revenues from LPCs accounted for approximately 91 percent of TVA's total operating revenues ~~in 2019. At September 30, 2019,~~for 2021. TVA had wholesale power contracts with ~~154 LPCs.~~153 LPCs at September 30, 2021. Each of these contracts requires the LPC to purchase from TVA all of the electric power required for service to the LPC's ~~customers.~~customers; however, flexibility agreements available to LPCs that have executed long-term contracts with TVA allow LPCs to locally generate or purchase up to approximately five percent of average total hourly energy sales over 2015 - 2019 in order to meet their individual customers' needs. LPCs purchase power under contracts with terms ~~that range from~~of five toor 20 years to terminate.

TVA's two largest LPCs — Memphis Light, Gas and Water Division ("MLGW") and Nashville Electric Service ("NES") — have contracts with a five-year and a 20-year termination notice period, respectively. Sales to MLGW and NES accounted for nine percent and eight percent, respectively, of TVA's total operating revenues for 2021. Certain LPCs, including MLGW, are evaluating options for future energy choices. In addition, in ~~2019.~~January 2021, four LPCs filed a complaint and petition with FERC asking FERC to order TVA to provide transmission and interconnection service to the LPCs or other suppliers that want to serve them. In August 2021, one of the LPCs notified FERC of its withdrawal from the complaint and petition. The remaining three LPCs accounted for three percent of TVA's total operating revenues for the year ended September 30, 2021. See Note 23 — Commitments and Contingencies — Legal Proceedings — Challenge to Anti-Cherrypicking Amendment for updates to this legal proceeding.

TVA and LPCs continue to work together to meet the changing needs of consumers around the Tennessee Valley. ~~At its August~~In 2019, ~~meeting,~~ the TVA Board approved a ~~20-year~~ Partnership Agreement option that better aligns the length of LPC power contracts with TVA's long-term commitments. Under the partnership arrangement, the LPC power contracts automatically renew each year and have a 20-year termination notice. The partnership arrangements can be terminated under certain circumstances, including TVA's failure to limit rate increases as provided for in the agreements going forward. Participating LPCs ~~will~~ receive benefits including a 3.1

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percent wholesale bill credit in exchange for their long-term commitment, which enables TVA to recover its long-term financial commitments over a commensurate period. In June 2020, TVA provided participating LPCs a flexibility option that allows them to locally generate or purchase up to approximately five percent of average total hourly energy sales over 2015 - 2019 in order to meet their individual customers' needs. As of ~~September 30, 2019, 131~~November 12, 2021, 145 LPCs had signed the 20-year Partnership Agreement with TVA, ~~which represents 56 percent of total operating revenues in 2019.~~and 74 LPCs had signed a Flexibility Agreement.

The power contracts between TVA and LPCs provide for the purchase of power by LPCs at the wholesale rates established by the TVA Board. Under the TVA Act, the TVA Board is authorized to regulate LPCs to carry out the purposes of the TVA Act through contract terms and conditions as well as through rules and regulations. TVA regulates LPCs primarily through the provisions of TVA's wholesale power contracts. All of the power contracts between TVA and the LPCs require that power purchased from TVA be sold and distributed to the ultimate consumer without discrimination among consumers of the same class and prohibit direct or indirect discriminatory rates, rebates, or other special concessions. In addition, there are a number of wholesale power contract provisions through which TVA seeks to ensure that the electric system revenues of the LPCs are used only for electric system purposes. Furthermore, almost all of these contracts specify the resale rates and charges at which the LPC must resell TVA power to its customers. These rates are revised from time to time, subject to TVA approval, to reflect changes in costs, including changes in the wholesale cost of power.

TVA also regulates LPC policies for customer deposits, termination of service for non-payment, information to consumers, and billing through a service practice policy framework. TVA's regulatory framework provides for consistent regulatory policy for ratepayers across the Tennessee Valley, while recognizing local considerations. The regulatory provisions in TVA's wholesale power contracts are designed to carry out the objectives of the TVA Act, including the objective of providing for an adequate supply of power at the lowest feasible rates. See Rates — Rate Methodology below.

Other Customers

Revenues from directly served industrial customers accounted for approximately ~~six~~seven percent of TVA's total operating revenues in ~~2019.~~2021. Contracts with these customers are subject to termination by the customer or TVA upon a minimum notice period that varies according to a number of factors, including the customer's contract demand and the period of time service has been provided. TVA also serves seven federal customers, ~~‎including~~including U.S. Department of Energy ("DOE") facilities and military installations, which accounted for approximately one percent of TVA's total operating revenues in ~~2019.~~2021.

Other Revenue

Other revenue consists primarily of wheeling and network transmission charges, sales of excess steam that is a by-product of power production, delivery point charges for interconnection points between TVA and the customer, and certain other minor items. Other revenue accounted for approximately ~~two~~one percent of TVA's total operating revenues in ~~2019.~~2021.

Rates

Rate Authority

The TVA Act gives the TVA Board sole responsibility for establishing the rates TVA charges for power. These rates are not subject to judicial review or to review or approval by any state or other federal regulatory body. Under the TVA Act, TVA is required to charge rates for power that will produce gross revenues sufficient to provide funds for:

•Operation, maintenance, and administration of its power system;

•Payments to states and counties in lieu of taxes ("tax equivalents");

•Debt service on outstanding indebtedness;

•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

•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 (collectively, "Bonds")~~Bonds in advance of their 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 1819 — Proprietary Capital.

TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment in 2014; therefore, the repayment of this amount is no longer a component of rate setting.

Rate Methodology

TVA uses a seasonal time of use wholesale rate structure comprised of base demand and energy rates, a fuel rate, and a grid access charge ("GAC"). In setting the base rates, TVA uses a debt-service coverage ("DSC") methodology to derive annual revenue requirements in a manner similar to that used by other public power entities that also use the DSC rate methodology. Under the DSC methodology, rates are calculated so that an entity will be able to cover its operating costs and to

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satisfy its obligations to pay principal and interest on ~~debt.~~debt, plus an additional margin. This ratemaking approach is particularly suitable for use by entities financed primarily, if not entirely, by debt, such as TVA, and helps ensure that TVA produces gross revenues sufficient to fund requirements specified in the TVA Act listed under Rate Authority above.

TVA recovers fuel costs and tax equivalent payments associated with fuel cost adjustments through a monthly rate reflecting the forecasted costs of fuel. ~~Beginning on October 1, 2018, fuel~~Fuel costs are allocated to three groups of customers: Standard Service (residential and small commercial customers), ~~Large Manufacturing~~large manufacturing customers with contract demands greater than 5 megawatts ("MW"), and ~~Large General Service~~large general service customers with contract demands greater than 5 MW. Fuel costs are allocated to these three classes of customers in relation to their hourly loads and TVA's hourly incremental dispatch cost. Total monthly fuel costs include costs for natural gas, fuel oil, coal, purchased power, emission allowances, nuclear fuel, and other fuel-related commodities as well as realized gains and losses on derivatives purchased to hedge the costs of such commodities.

In ~~recent~~prior years, TVA, LPCs, and directly served industries ~~have worked collaboratively to develop~~developed changes to TVA's rate structures that focus on TVA's long-term pricing efforts. These changes ~~are improving~~improved pricing by better aligning rates with underlying cost drivers and by sending improved pricing signals, while maintaining competitive industrial rates and keeping residential rates affordable. The rate structures ~~are~~ also ~~designed to reduce~~reduced wholesale energy rates for Standard Service and ~~introduce~~introduced a GAC at an offsetting rate to better recover fixed costs. This approach ~~will~~ more accurately ~~reflect~~reflects the wholesale cost of energy and ~~recognize~~recognizes the value of the grid's reliability and associated fixed costs. TVA's modernized approach to pricing provides bill stability while maintaining reliability and fairness for all TVA's customers. TVA will continue to collaborate with LPCs and directly served industries as necessary to ensure alignment with this approach.

Power Supply and Load Management Resources

General

TVA seeks to balance production capabilities with power supply requirements by promoting the conservation and efficient use of electricity and, when necessary, buying, building, or leasing assets or entering into power purchase ~~agreements.~~agreements ("PPAs"). TVA also seeks to employ a diverse mix of energy generating sources and works toward obtaining greater amounts of its power supply from clean (low or zero carbon emitting) resources.

TVA is making investments in its generating portfolio to modernize the fleet while also allowing TVA to maintain competitive rates and high reliability and work toward carbon emission reductions. As TVA continues to evaluate the impact of retiring its coal-fired fleet by 2035, it is also evaluating adding flexible lower carbon-emitting gas plants as a bridging strategy to maintain reliability, such as the ongoing projects at TVA’s Paradise and Colbert sites. In addition, TVA is committed to investing in the future of nuclear with the evaluation of emerging advanced nuclear technologies, such as small modular reactors ("SMRs"), and has uprated the existing Browns Ferry units to generate more low-cost, reliable, and carbon-free energy. TVA is also implementing the Hydro Life Extension Program with a focus on improving the availability and flexibility of the hydroelectric fleet. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives — Generation Resources — Extended Power Uprate, Natural Gas-Fired Units, and Small Modular Reactors, in addition to Renewable Energy Resources — Hydro Modernization Program below.

In addition, TVA and other utilities across the southeastern United States are exploring the creation of an automated energy exchange platform across the region to facilitate more short-term power exchanges. The energy exchange would be an enhancement to the existing market. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives — Automated Energy Exchange Platform.

Power generating facilities operated by TVA at September 30, ~~2019,~~2021, included three nuclear sites, 17 natural gas and/or oil-fired sites, ~~six~~five coal-fired sites, 29 conventional hydroelectric sites, one pumped-storage hydroelectric site, one diesel generator site, and 1413 solar ~~energy sites, although certain of these facilities were out of service as of September 30, 2019.~~installations. See Item 2, Properties — Generating Properties — Net Capability for a discussion of the units at these facilities. TVA also acquires power under ~~power purchase agreements~~PPAs of varying durations, including short-term contracts of less than 24-hours in duration. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Financial Results — Operating Expenses.

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The following table shows TVA's generation and purchased power by generating source as a percentage of all

electric power generated and purchased (based on kilowatt hours ("kWh")) for the periods indicated:

Power Supply by Generating Source
For the years ended September 30
Generation Resource⁽¹⁾
2019 2018 2017
Nuclear 39%
39%
38%
Natural gas and/or oil-fired 20%
20%
16%
Coal-fired 17% 19%
25%
Hydroelectric 10%
9%
7%
Purchased power (non-renewable) 9%
9%
9%
Purchased power (renewable) 5%
4%
5%


Total Power Supply by Generating Source For the years ended September 30
Generation Resource(1)	2021	2020	2019
Nuclear	41%	42%	39%
Natural gas and/or oil-fired	21%	22%	20%
Coal-fired	15%	13%	17%
Hydroelectric	10%	10%	10%
Purchased power (non-renewable)	8%	8%	9%
Purchased power (renewable)	5%	5%	5%

Note

(1) TVA's non-hydro renewable resources from TVA facilities are less than one percent for all periods shown, and therefore are not represented on the table above. Purchased power (renewable) contains the majority of non-hydro renewable energy supply.

Nuclear

At September 30, ~~2019,~~2021, TVA had three nuclear sites consisting of seven units in operation. The units at Browns Ferry Nuclear Plant ("Browns Ferry") are boiling water reactor units, and the units at Sequoyah Nuclear Plant ("Sequoyah") and Watts Bar Nuclear Plant ("Watts Bar") are pressurized water reactor units. Operating information for each of these units is included in the table below.


TVA Nuclear Power At September 30, 2019
TVA Nuclear Power At September 30, 2021				TVA Nuclear Power At September 30, 2021
Nuclear Unit	Summer Net Capability (MW)	Net Capacity Factor for 2019 (%)	Date of Expiration of Operating License	Nuclear Unit	Summer Net Capability (MW)	Net Capacity Factor for 2021 (%)	Date of Expiration of Operating License
Browns Ferry Unit 1⁽¹⁾	1,101	94.3	2033	Browns Ferry Unit 1(1)	1,227	87.7	2033
Browns Ferry Unit 2⁽¹⁾	1,103	84.3	2034	Browns Ferry Unit 2(1)	1,208	83.3	2034
Browns Ferry Unit 3⁽¹⁾	1,105	101.7	2036	Browns Ferry Unit 3(1)	1,227	99.3	2036
Sequoyah Unit 1	1,152	93.3	2040	Sequoyah Unit 1	1,152	85.9	2040
Sequoyah Unit 2	1,140	86.3	2041	Sequoyah Unit 2	1,140	97.2	2041
Watts Bar Unit 1	1,157	80.9	2035	Watts Bar Unit 1	1,157	95.4	2035
Watts Bar Unit 2	1,164	84.3	2055	Watts Bar Unit 2	1,164	74.8	2055

Note

(1)~~The summer~~ Summer net capability for Browns Ferry ~~excludes~~includes the impact of the ~~Extended Power Uprate project. The generating capability is expected to increase by an estimated 465 MW after sufficient run time to validate the new capacity.~~

~~Extended Power Uprate. On August 14, 2017, the Nuclear Regulatory Commission ("NRC") approved TVA's request for a 465 MW~~ extended power uprate ~~("EPU")~~ project ~~at Browns Ferry. As~~which was finalized in 2021 through issuance of ~~September 30, 2019, physical work on all units was complete and the generation capacity is expected to increase 465 MW after sufficient run time to validate the new capacity.~~related engineering memos. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources — Extended Power Uprate.

Other Nuclear Initiatives. ~~TVA has submitted~~The NRC issued an Early Site Permit ~~Application~~ to ~~the NRC~~TVA in December 2019 to license ~~small modular reactors ("SMRs")~~SMRs at TVA's Clinch River Nuclear Site in Oak Ridge, Tennessee. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources — Small Modular Reactors.

Other Nuclear Matters. Operating nuclear facilities subjects TVA to waste disposal, decommissioning, and insurance requirements, as well as litigation risks. See Fuel Supply — Nuclear Fuel below for a discussion of spent nuclear fuel and low-level radioactive waste, Note 22 23 — Commitments and Contingencies — Contingencies for a discussion of TVA's nuclear decommissioning liabilities and the related trust and nuclear insurance, and Note 22 23 — Commitments and Contingencies —Legal Proceedings and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Apparent Violations of NRC Regulations for a discussion of legal and administrative proceedings related to TVA's nuclear program, which discussions are incorporated herein by reference.

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Natural Gas and/or Oil-Fired

~~As of~~ At September 30, ~~2019,~~2021, TVA's natural gas and oil-fired fleet consisted of 101 combustion turbine power blocks (86 simple-cycle units, one cogeneration unit, and 14 combined-cycle power units)~~. Sixty~~, accounting for 12,183 MW of summer net capability. Sixty-six of the simple-cycle units are currently capable of quick-start response allowing full generation capability in approximately 10 minutes. The economic dispatch of natural gas-fired plants depends on both the day-to-day price of natural gas and the price of other available intermediate resources such as coal-fired plants. TVA uses simple-cycle units to meet peaking or backup power needs. ~~TVA also uses cogeneration at one simple-cycle unit.~~ TVA's 2019 ~~Integrated Resource Plan ("IRP")~~IRP projects significant solar expansion over the next decade. The natural gas-fired fleet supports that expansion by providing reliability across all hours, as well as the flexibility to help manage ramping and intermittency. As TVA evaluates its coal-fired fleet, it will also evaluate adding flexible lower carbon-emitting gas plants as a bridging strategy.

See Item 2, Properties — Generating Properties, Note 9,8 — Leases, Note ~~10,~~11 — Variable Interest Entities, andNote 1314 — Debt and Other Obligations for a discussion of lease arrangements into which TVA has entered in connection with certain combustion turbine units. Because of TVA's strategy of portfolio diversification and reduction of air emissions, TVA may decide to make further strategic investments in natural gas-fired facilities in the future by purchase, construction, or lease. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources— Natural Gas-Fired Units for a discussion of ongoing projects at certain natural gas-fired facilities.

Coal-Fired

~~As of~~ At September 30, ~~2019,~~2021, TVA had ~~six~~five coal-fired plants consisting of 2625 active units, accounting for ~~7,886~~6,580 MW of summer net capability. TVA considers units to be in an active state when the unit is generating, available for service, or temporarily unavailable due to equipment failures, inspections, or repairs. All other coal-fired units are considered retired. ~~During its August~~In 2018, ~~meeting,~~ the TVA Board approved a plan to perform assessments of Bull Run Fossil Plant ("Bull Run") and Paradise Fossil Plant ("Paradise"). Results of these assessments were presented to the TVA Board at its February 2019 meeting, and the Board approved the retirement of Paradise Unit 3 by December 2020 and Bull Run by December 2023. ~~Subsequent to~~Paradise Unit 3 was taken offline on February 1, 2020, effectively retiring the ~~Board approval, TVA determined Paradise would not be restarted after January 2020 due to the plant's material condition.~~plant.

Coal-fired plants have been subject to increasingly stringent regulatory requirements over the last few decades, including those under the Clean Air Act ("CAA"), the ~~Environmental Protection Agency's~~Clean Water Act ("~~EPA"~~CWA") ~~Coal Combustion Residuals ("CCR") Rule,~~, and the ~~associated regulations.~~Resource Conservation and Recovery Act ("RCRA"). TVA has committed to a programmatic approach for the evaluation of its sites where ~~CCR is~~coal combustion residuals ("CCR") are stored to meet all applicable state and federal regulations. Increasing regulatory costs and carbon reduction efforts have caused TVA to consider whether to make the required capital investments to continue operating its coal-fired facilities. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources— Coal Combustion ~~Residual~~Residuals Facilities.

TVA is moving toward a more balanced generation plan with greater reliance on lower-cost and cleaner energy generation technologies. Since September 30, 2010, TVA has reduced its summer net capability of coal-fired units by ~~6,682~~7,653 MW. ~~The~~Following the publication of the 2019 IRP, ~~indicated evaluation of additional coal unit retirements. Most~~TVA began conducting end-of-life evaluations of the remaining ~~coal-fired plants are~~coal fleet to inform long-term planning. TVA’s recent evaluation confirms that the aging coal fleet is among the oldest in the nation ~~still~~and is experiencing deterioration of material condition and performance challenges. The performance challenges are projected to increase due to the coal fleet’s advancing age and the difficulty of adapting the coal fleet’s generation within the changing generation profile. Additionally, the coal fleet is contributing to environmental, economic, and reliability risks. TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035, and that evaluation includes environmental review, public input, and TVA Board approval. See Item 7,Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources — Optimum Energy Portfolio.

Diesel Generators

At September 30, 2021, TVA had one diesel generator plant consisting of five units, and this facility accounted for 9

MW of summer net capability. These units are not currently dispatched for generation to the transmission grid.

Raccoon Mountain Pumped-Storage Plant

At September 30, 2021, TVA had four units at Raccoon Mountain Pumped-Storage Plant ("Raccoon Mountain") with a total net summer capability of 1,635 MW. These units are utilized to balance the transmission system as well as generate power. TVA uses electricity generated by its fleet during periods of low demand to operate pumps that fill the reservoir at Raccoon Mountain. Then, during periods of high or peak demand, the water is released and the pumps reverse to work as power generating turbines.

Renewable Energy Resources

As more consumers and businesses are demanding cleaner energy, the utility industry is evolving to meet those needs. As TVA also evolves, it will see impacts to the way it does business through the pricing of products, transmission of energy, and

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development of new products and services for its customers in ~~operation,~~support of changing customer preferences. Many companies are focusing on sustainability and ~~their fit within TVA's~~requiring more energy efficiency and renewable energy options. In addition, TVA also seeks to obtain greater amounts of its power supply from clean resources to work towards carbon emission reductions. As a result, TVA is increasing its renewable energy portfolio, ~~will be further tested~~by investing in existing assets and securing power purchase agreements for out-of-Valley wind and in-Valley solar. New utility-scale solar is increasing, in part driven by customers’ demand through TVA’s Green Invest Program. TVA also encourages renewable power and offers renewable solutions through various current programs and offerings. Finally, TVA is investing in its hydroelectric fleet through the ~~future with increasing amounts of solar generation utilized by TVA. TVA's long-range plans will continue to consider the costs~~Hydro Life Extension Program. See Distributed Energy Resources below for information on renewable energy solutions and ~~benefits of significant environmental~~Power Purchase and ~~other major capital investments at its remaining coal-fired plants.~~Other Agreements below for information on TVA’s power purchase agreements, including renewable agreements.

~~Hydroelectric~~

Conventional Hydroelectric ~~Dams~~.Dams. TVA maintains 29 conventional hydroelectric dams with ~~113~~109 generating units throughout the Tennessee River system for the production of electricity. As of September 30, ~~2019,~~2021, these units accounted for ~~3,784~~3,750 MW of summer net capability. The amount of electricity that TVA is able to generate from its hydroelectric plants depends on a number of factors, including the amount of precipitation and runoff, initial water levels, generating unit availability, and the need for water for competing water management objectives. When these factors are unfavorable, TVA must increase its reliance on higher cost generation plants and purchased power. In addition, a portion of energy generated by nine U.S. Army Corps of Engineers ("USACE") dams on the Cumberland River system contributes to the TVA power system. See Weather and Seasonality below andItem 7,Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Dam Safety and Remediation Initiatives.

~~Raccoon Mountain Pumped-Storage Plant~~. As of September 30, 2019, TVA has four units at Raccoon Mountain Pumped-Storage Plant ("Raccoon Mountain") with a total net summer capability of 1,616 MW. These units are utilized to balance the transmission system as well as generate power. TVA uses electricity generated by its fleet during periods of low demand to operate pumps that fill the reservoir at Raccoon Mountain. Then, during periods of high or peak demand, the water is released and the pumps reverse to work as power generating turbines.

~~Hiwassee Hydro Unit 2.~~Hiwassee Hydro Unit 2 has a unique reversible turbine/generator that acts as a pump and a turbine enhancing TVA's ability to balance baseload generation. At September 30, 2021, Hiwassee Hydro Unit 2 ~~has a~~accounted for 86 MW of the conventional hydroelectric summer net ~~capability of 86 MW.~~capability.

Hydro Modernization ~~Program. TVA is scheduled to complete the Hydro Modernization Program in 2020 with the completion of South Holston Unit 1 and Pickwick Landing Dam ("Pickwick") Unit 2. The~~Program. TVA's Hydro Modernization Program began in

1992 and ~~focuses~~focused on units with potential to increase peaking capacity and improve reliability. AsWith the completion of ~~September 30, 2019,~~Pickwick Landing Dam ("Pickwick") Unit 2 in 2020, the initial Hydro Modernization Program has concluded with modernization ~~had been~~ completed on 6162 conventional hydroelectric ~~units.~~units under the program. The modernization projects resulted in ~~447~~453 MW of increased capacity from the conventional hydroelectric units, with an average efficiency gain of approximately five percent. In 2019, TVA began its transition to a new program, the Hydro Major Maintenance Program, intended to focus on life extension and addressing reliability risks that will support the preservation of TVA's hydroelectric fleet capacity. Hydroelectric generation will continue to be an important part of TVA's energy ~~mix.~~mix since it plays a vital role in carbon reduction initiatives, the ability to integrate other renewables into the power portfolio, and, ultimately, TVA's ability to meet changing customer preferences for cleaner energy sources. As such, TVA is implementing the Hydro Life Extension Program with a focus on improving the availability and flexibility of the hydroelectric fleet to help meet these changing customer preferences.

Self-Directed Solar. During 2019, the TVA Board approved the opportunity for TVA to explore being directly involved in the development of a utility-scale solar project, contingent on the successful completion of environmental reviews under National Environmental Policy Act ("NEPA") and other applicable laws. A project structure has been developed that will allow TVA to work with financial partners for solar development, and in September 2021, TVA purchased land for this planned 200 MW development. As of September 30, 2021, TVA had spent approximately $24 million on the project and expects to spend an additional $293 million through 2024.

Other Renewable Energy ~~Resources~~

Resources. TVA's other renewable energy ~~portfolio includes both~~resources include TVA-owned ~~assets~~solar and renewable energy ~~purchases.~~purchases, a majority associated with TVA renewable programs. In addition to the hydroelectric units above, TVA owns 1413 solar ~~sites with a total net summer capability of~~installations that account for approximately 1 ~~MW.~~MW of summer net capability. See Distributed Energy Resources below for a description of TVA's current renewable energy offerings and Power Purchase and Other Agreements for information on renewable energy purchases.

TVA tracks its renewable energy commitments and claims through the management of ~~renewable energy certificates~~Renewable Energy Certificates ("RECs"). The RECs, which each represent 1 ~~MWh~~megawatt-hour ("MWh") of renewable energy generation, are principally associated with wind, solar, biomass, and low-impact hydroelectric. TVA continues to evaluate ways to adjust to customer preferences and requirements for cleaner and greener energy, including the acquisition of RECs from renewable purchased ~~power. These RECs~~power that can be sold to customers to meet their needs. Overall, TVA will procure needed renewable supply through a diversified approach, which could include a competitive procurement process, strategic partnerships, or construction of renewable facilities to meet these needs.

~~Diesel Generators~~

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Total Renewable Energy Resources. As of September 30, ~~2019, TVA had one diesel generator plant consisting~~2021, TVA's total renewable capacity, including TVA-owned and operated facilities, operating and contracted PPAs, and TVA's self-directed solar project, amounted to 8,269 MW.

Notes

(1) Contracted resources are executed power purchase agreements expected to come online at a future date.

(2) Hydroelectric power consists of ~~five units,~~3,750 MW from TVA-owned conventional hydroelectric facilities and ~~this facility accounted for 9~~402 MW from a renewable PPA.

(3) Biomass consists of 49 MW of ~~summer net capability.~~operating resources and 5 MW of contracted resources.

TVA's operating renewables by location and by source are detailed below:

Notes

(1) In-Valley refers to the renewable energy that is sourced within TVA's service territory. Out-of-Valley refers to the renewable energy that is sourced outside of TVA's service territory and solely consists of wind power.

(2) See Power Purchase and Other Agreements below. PPAs also includes capability from various historical renewable energy programs primarily with individuals and small businesses.

Distributed Energy Resources

Consumer desire for energy choice, ~~is,~~ among other things, is driving the expectation for flexible options in the electric industry. TVA and LPCs are working together to leverage the strengths of the Tennessee Valley public power model to provide ~~economic,~~distributed energy solutions that are economical, sustainable, and ~~flexible distributed energy solutions.~~flexible. TVA will focus on the safety and reliability impacts of these resources as they are interconnected to the grid and will ensure that the pricing of electricity remains as low as feasible. Additional regulatory considerations and analysis may be required as the distributed energy resources ("DER") market, technologies, and programs evolve.

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DER Programs and Offerings. TVA is working to develop pricing and regulatory structures with a deliberate and thoughtful analysis of each current and future program offering. This requires strong partnerships with LPCs to give customers choices and provide end-use consumers the flexibility they desire.

~~During its February 2019 meeting, the TVA Board approved new~~encourages renewable power through various current programs and offerings. These solutions ~~including a mid-scale option.~~include:

Small-scale Solutions. The ~~mid-scale option, also known as the~~Green Connect Program, launched in January 2021, connects residential customers interested in on-site solar installations with qualified solar installers.

Mid-scale Solutions. The Flexibility Research Project iswas a joint pilot project with LPCs to enable solutions for situations where the end-use consumer needs onsite renewable or distributed ~~generation~~generation. The Flexibility Research Project ceased accepting new applications in January 2021 as TVA introduced other flexible programs and ~~for~~offerings discussed in this section.

Utility-scale Solutions. The Green Invest Program matches customer demand with renewable supply through a Green Invest Agreement. The goal of the Green Invest program is to meet the long-term sustainability needs of customers at scale. TVA will procure the needed renewable supply through a diversified approach, which could include a competitive procurement process, strategic partnerships, or construction of renewable facilities to ~~gain market knowledge~~meet these needs. In addition, Generation Flexibility is a solution available to long-term LPC partners and ~~operational insights from these research projects.~~supports the deployment of up to 2,000 MW of distributed solar to provide clean, local generation. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Ratemaking.

Other Renewable ~~Power~~ Solutions. The Green Switch Program allows customers to support wind, solar, and biomass renewable resources through purchasing renewable energy generated in the Tennessee Valley, sold in 200 kWh blocks. The Green Flex Program gives commercial and industrial customers the ability to meet sustainability goals and to make renewable energy claims through RECs from wind generation located outside TVA's service area.

Other DER Initiatives. TVA also offers various energy efficiency programs. Through the Home Uplift Program, TVA is partnering with LPCs, state and local governments, non-profit agencies, energy efficiency advocates, third-party contributors, and the Tennessee Valley Public Power Association ("TVPPA") to complete home evaluations and make high-impact home energy upgrades for qualifying homeowners. In addition, TVA and LPCs conduct workshops to educate homeowners about low and no-cost energy efficiency upgrades that improve their quality of life. Through the School Uplift Program pilot, TVA is partnering with LPCs as well as state and local governments to assist schools with adopting strategic energy management practices. The engagement with each school includes monthly virtual workshops and fosters performance through competitions for energy efficiency grants and grants for solar pavilions. Finally, through the Community Centered Growth Program, TVA is partnering with LPCs to assist small businesses located within underserved communities with energy evaluations and no-cost energy improvement investments.

TVA has encouraged the development of solar, wind, biomass, and low-impact hydroelectric generation systems across the Tennessee Valley through various current and former offerings. As of September 30, 2019, the combined participation for all such renewable solutions is 415 MW of installed operating capacity with nearly 685 MW of additional approved capacity. Additionally, TVA contracts for approximately 1,215 MW of operating wind capacity from outside the Tennessee Valley via power purchase agreements.

In ~~May~~ 2017, the TVA Board authorized up to $300 million to be spent over the next 10 years, subject to annual budget availability and necessary environmental reviews, to build an enhanced fiber optic network~~by adding up to 3,500 additional miles~~ that will better connect ~~its~~TVA's operational assets. Fiber is a vital part of TVA's modern communication infrastructure. The new fiber optic lines will improve the reliability and resiliency of the generation and transmission system while enabling the system to better accommodate DER as they enter the market.

New energy management systems and energy storage technologies present opportunities for more sophisticated and integrated operation of the entire grid. The advent of electric vehicles and small-scale renewable generation has hastened the development of energy storage technologies that have the potential to mitigate the intermittent supply issues associated with many renewable generation options. Implementation of these technologies in conjunction with two-way communication to the site creates the potential for more efficient usage of other DER on the grid.

TVA continues to focus on utilizing more EVs and installing charging stations inside the Tennessee Valley. TVA's ~~Electric Vehicle~~electric vehicle ("EV") strategy is a staged approach that will evolve as the local EV market matures. ~~Since 2011,~~ TVA ~~has focused on utilizing more EVs and installing charging stations inside the Tennessee Valley. This approach has~~

~~enabled TVA to gain insights on the value and impact to utilities of large-scale electrification. TVA has also~~ partnered with over 30 organizations across the State of Tennessee (known as the "Drive Electric Tennessee" collaborative) to create a roadmap to outline local market needs for widespread adoption. This foundational information is crucial as more affordable, longer range EVs come to the ~~market~~market. TVA is partnering with LPCs and others to support the electrification of transportation in the ~~next few years.~~Valley in a multi-year EV initiative. The initiative focuses on reducing or eliminating EV market barriers by setting EV policies, improving charging infrastructure availability, expanding EV availability and offerings, and spreading EV consumer awareness. In November 2020, the TVA Board approved new policies and an optional wholesale EV rate aimed at encouraging the development of charging infrastructure in the Valley. The updated policies enable LPC investment in public charging infrastructure and allow for the conditional resale of electricity, for transportation purposes only, by any charging developer on a kWh basis. The optional wholesale rate was developed with high power EV charging in mind and provides a stable option for those developing charging infrastructure.

Onsite energy management technologies and the proliferation of companies interested in providing services to support and aggregate the impacts of such systems provide another DER opportunity. Such systems can afford the consumer benefits through reduced consumption, increased comfort, detailed energy use data, and savings from time-sensitive rate structures. TVA and LPCs must consider the integration of the impacts from changes in energy usage patterns resulting from the operation of such systems.

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Demand response systems that take advantage of the increasing sophistication in communication to homes, businesses, and distribution system assets also afford the opportunity for more granular control of system demand. Technologies can manage individual customer systems to shift usage from peak to off-peak periods and create significant reductions in the need for peak generation ~~output.~~output or curtail usage for short periods to balance system demand. More sophisticated distribution control systems can also lower peak demand through control of excess voltage on the grid on either a dispatchable or continuous basis. Some large industrial customers also have the capacity to respond instantaneously and can augment operational flexibility by providing ancillary services.

TVA is leading an initiative to determine the value of DER for its system. Initial efforts are focused on small-scale distributed (rooftop) solar, but the efforts are general enough to allow for other distributed options. These efforts are ongoing, led by a team that includes technical support from the Electric Power Research Institute ("EPRI"), to develop a methodology to identify site preferences on the distribution systems of the LPCs. This work, along with locational analysis already completed by TVA, will help in placing utility-scale solar in furtherance of the IRP recommendations as well as distributed solar to meet the needs of LPCs. See Research and Development below.

~~Purchased~~ Power Purchase and Other Agreements

TVA acquires power from a variety of power producers generally through long-term and short-term ~~power purchase agreements ("PPAs")~~PPAs as well as through spot market purchases. During ~~2019,~~2021, TVA acquired approximately 8794 percent of the power that it purchased through the long-term ~~PPA~~PPAs described below, including agreements for long-term renewable generation resources, approximately one percent through short-term PPAs, and approximately 12five percent on the spot market.

~~Renewable Power Purchase Agreements.~~ In order to meet customer preferences and requirements for cleaner and greener energy, TVA has entered into certain PPAs with renewable resource ~~providers during 2019.~~providers. As of September 30, 2021, TVA had operating or contracted capacity totaling 4,313 MW of summer net capability under renewable PPAs. These agreements are part of progressive partnerships that align the core values of TVA and the public power model with the desire of TVA's customers for renewable energy. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Changing Customer Preferences — Renewable Power Purchase Agreements.

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~~A portion of~~ TVA's capability provided by ~~power purchase agreements~~PPAs is primarily provided under contracts that expire between ~~2021~~2022 and ~~2042,~~2045, and ~~the most significant of these contracts~~ are described in the table below.


Power Purchase Contracts At September 30, 2019
Power Purchase Agreements At September 30, 2021				Power Purchase Agreements At September 30, 2021
Type of Facility	Location	Summer Net Capability (MW)	Contract Termination Date	Type of Facility	Location	Number of Contracts	Summer Net Capability (MW)	Contract Termination Date
Lignite	Mississippi	440	2032
Natural gas	Alabama	720	2023
Natural gas	Alabama	615	2026
Renewable PPAs				Renewable PPAs
Operating				Operating
Solar	Alabama	75	2037	Solar	Tennessee	2	58	2032 - 2039
Solar⁽¹⁾	Alabama	227	2041	Solar(1)	Alabama	2	302	2037 - 2041
Solar⁽¹⁾	Alabama	150	2042
Solar	Tennessee	53	2038
Solar	Tennessee	4.5	2032
Solar⁽¹⁾	Tennessee	147	2042
Solar⁽¹⁾	Tennessee	150	2042
Landfill Gas	Tennessee	4.8	2031
Hydroelectric⁽²⁾	Tennessee and Kentucky	347	Upon three years' notice
Total Operating Solar				Total Operating Solar		4	360
Wind	Iowa	198	2031	Wind	Tennessee	1	27	2025
Wind	Iowa	101	2030	Wind	Iowa	2	299	2030 - 2031
Wind	Kansas	201	2032	Wind	Kansas	2	366	2032 - 2033
Wind	Kansas	165	2033	Wind	Illinois	3	550	2032 - 2033
Wind	Illinois	150	2032
Wind	Illinois	200	2032
Wind	Illinois	200	2033
Wind	Tennessee	27	2025
Total Operating Wind				Total Operating Wind		8	1,242
Hydroelectric				Hydroelectric	Tennessee and Kentucky	1	402	Upon three years' notice
Landfill Gas				Landfill Gas	Tennessee	1	5	2031
Subtotal Operating				Subtotal Operating		14	2,009
Contract Renewable Resources(2)				Contract Renewable Resources(2)			326
Total Operating				Total Operating			2,335

Contracted				Contracted
Solar(3)				Solar(3)	Tennessee	11	1,186	2038 - 2045
Solar(4)				Solar(4)	Kentucky	2	242	2038 - 2043
Solar(4)				Solar(4)	Mississippi	3	550	2043
Total Contracted				Total Contracted		16	1,978
Total Renewable PPAs				Total Renewable PPAs		30	4,313

Nonrenewable PPAs				Nonrenewable PPAs
Operating				Operating
Diesel	Tennessee	23	2023	Diesel	Tennessee	4	59	2023 - 2032
Diesel	Tennessee	20	2021	Diesel	Alabama	1	10	2035
Diesel	Tennessee	8	2023	Diesel	Mississippi	2	46	2023 - 2028
Diesel	Tennessee	8	2028
Diesel	Mississippi	20	2023
Diesel	Mississippi	26	2028
Diesel	Alabama	10	2028
Total Operating Diesel				Total Operating Diesel		7	115
Natural Gas				Natural Gas	Alabama	4	2,573	2022 - 2033
Lignite				Lignite	Mississippi	1	440	2032
Total Operating				Total Operating		12	3,128
Contracted				Contracted
Battery Storage(5)				Battery Storage(5)	Tennessee	1	66	2045
Battery Storage(4)				Battery Storage(4)	Kentucky	1	30	2043
Battery Storage(4)				Battery Storage(4)	Mississippi	3	150	2043
Total Contracted				Total Contracted		5	246
Total Nonrenewable PPAs				Total Nonrenewable PPAs		17	3,374

Table of rainfall, which was 269 percent of normal. Although many locations along the Tennessee River reached or exceeded flood stage, TVA's efforts, including storing water in large tributary reservoirs, accounted for approximately $1.6 billion in avoided damages in areas such as Chattanooga, Tennessee.Contents

Environmental Stewardship Activities

TVA's mission includes managing the Tennessee River, its tributaries, and federal lands along the shoreline to provide, among other things, year-round navigation, flood damage reduction, affordable and reliable electricity, recreational opportunities, adequate water supply, improved water quality, and natural resource protection. There are 49 dams that comprise TVA's integrated reservoir system. Each dam may also have ancillary structures used to support or assist the main dam's function. The reservoir system provides approximately 800 miles of commercially navigable waterways and also provides significant flood reduction benefits both within the Tennessee River system and downstream on the lower Ohio and Mississippi Rivers. The reservoir system also provides a water supply for residential and industrial customers, as well as cooling water for TVA's coal-fired plants, combined cycle plants, and nuclear power plants. In 2020, the TVA Board approved a new Environmental Policy. TVA's ~~Environmental Policy~~updated policy provides objectives for an integrated approach related to providing ~~cleaner,~~ reliable, affordable, and ~~low-cost energy,~~increasingly clean energy; engaging in proactive stewardship of the Tennessee River system and public lands; and supporting sustainable economic ~~growth, and engaging in proactive environmental stewardship in a balanced and ecologically sound manner.~~growth. The Environmental Policy also provides additional direction in several environmental stewardship areas related to reducing environmental impacts on the Valley's natural resources, including reducing carbon intensity and air emissions; minimizing waste; and protecting water ~~resource protection~~resources, biodiversity, and ~~improvements, sustainable land use, and natural resource management.~~cultural resources.

TVA serves the people of the TVA region through the integrated management of the Tennessee River system and public lands, which include approximately 11,000 miles of shoreline; 650,000 surface acres of reservoir water; and 293,000 acres of reservoir lands. TVA accomplishes this mission and supports the objectives of the TVA Environmental Policy through implementation of its natural resources stewardship strategy. Within this strategy, TVA confirms a desire to remain agile, balance competing demands, and be a catalyst for collaboration in order to protect and enhance biological, cultural, and water resources as well as create and sustain destinations for recreation and opportunities for learning and research. As part of the strategy, TVA intends to assist water-based community development with issuing permits, technical support, and land agreements using planning, clear regulations, meaningful guidelines, and consistent enforcement. Additional guidance for carrying out many of TVA's essential stewardship responsibilities is provided in TVA's Natural Resource Plan ("NRP"). In 2020, changes were made to TVA's NRP to support a more strategic, flexible, and comprehensive management approach to TVA's natural resource stewardship work. The updated plan enhances alignment with TVA's mission through economic development, energy, and environmental stewardship and guides business planning. In the newly published NRP, TVA ~~is currently updating its NRP. See Item 7, Management's Discussion and Analysis~~expanded from six resource areas to ten focus areas, ensuring the NRP provides a more comprehensive view of ~~Financial Condition and Results of Operations —~~ ~~Key Initiatives and Challenges — Natural Resource Plan~~.resource stewardship efforts.

Economic Development Activities

Economic development, along with energy production and environmental stewardship, is one of the primary statutory purposes of TVA. TVA works with its LPCs; regional, state, and local agencies; and communities to showcase the advantages available to businesses locating or expanding in TVA's service area. TVA's primary economic development goals are to recruit companies to locate in the Tennessee Valley, encourage expansion of existing business and industry that provide quality jobs, and assist communities in the Tennessee Valley with economic growth opportunities. TVA seeks to meet these goals through a combination of initiatives and partnerships designed to provide financial assistance, technical services, industry expertise, and site-selection assistance to new and existing businesses.

Economic development programs developed by TVA ~~include those which focus on supporting~~support all communities, including rural and economically distressed communities, across the Tennessee Valley. Through its economic development activities, TVA endeavors to recruit and retain companies in targeted business sectors, foster capital investment and job growth, and assist communities in the Tennessee Valley with economic growth opportunities.

TVA seeks to achieve these goals through a combination of initiatives and partnerships with LPCs, regional, state, and local agencies, and communities by ~~working~~providing financial incentives, technical services, industry expertise, and site-selection assistance to new and existing businesses in ~~close partnership with other federal and state organizations. TVA also~~ ~~jointly offers~~the Tennessee Valley. TVA's economic development incentive ~~programs with participating LPCs. These~~ programs offer competitive incentives to ~~existing~~new and ~~potential~~existing power customers in certain business sectors that make multi-year commitments to invest in

the Tennessee Valley. In addition to providing financial support ~~for these programs,~~to businesses, TVA offers ~~resources to~~ communities and economic developers ~~in the areas of recruitment, leadership development, industrial product preparedness (sites and buildings), planning,~~site selection services, technical and project ~~assistance.~~development assistance, and leadership training services.

In 2021, TVA's economic development efforts helped recruit or expand ~~215~~269 companies into the TVA service ~~area during~~ ~~2019~~.area. These companies announced capital investments of over ~~$8.9~~$8.8 billion and ~~the expected creation~~expect to create and/or ~~retention of~~retain approximately ~~66,500~~80,900 jobs.

Regulation

Congress

TVA exists pursuant to the TVA Act as enacted by Congress and carries on its operations in accordance with this legislation. Congress can enact legislation expanding or reducing TVA's activities, change TVA's structure, and even eliminate TVA. Congress can also enact legislation requiring the sale of some or all of the assets TVA operates or reduce the U.S.'s ownership in TVA. To allow TVA to operate more flexibly than a traditional government agency, Congress exempted TVA from all or parts of certain general federal laws that govern other agencies, such as federal labor relations laws and the laws related to the hiring of federal employees, the procurement of supplies and services, and the acquisition of land. Other federal laws enacted since the creation of TVA that are applicable to other agencies have been made applicable to TVA, including those related to paying employees overtime and protecting the environment, cultural resources, and civil rights.

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Securities and Exchange Commission

Section 37 of the Securities Exchange Act of 1934 (the "Exchange Act") requires TVA to file with the ~~SEC~~Securities and Exchange Commission ("SEC") such periodic, current, and supplementary information, documents, and reports as would be required pursuant to Section 13 of the Exchange Act if TVA were an issuer of a security registered pursuant to Section 12 of the Exchange Act. Section 37 of the Exchange Act exempts TVA from complying with Section 10A(m)(3) of the Exchange Act, which requires each member of a listed issuer's audit committee to be an independent member of the board of directors of the issuer. Since TVA is an agency and instrumentality of the U.S., securities issued or guaranteed by TVA are "exempted securities" under the Securities Act of 1933, as amended (the "Securities Act"), and may be offered and sold without registration under the Securities Act. In addition, securities issued or guaranteed by TVA are "exempted securities" and "government securities" under the Exchange Act. TVA is also exempt from Sections 14(a)-(d) and 14(f)-(h) of the Exchange Act (which address proxy solicitations) insofar as those sections relate to securities issued by TVA, and transactions in TVA securities are exempt from rules governing tender offers under Regulation 14E of the Exchange Act. Also, since TVA securities are exempted securities under the Securities Act, TVA is exempt from the Trust Indenture Act of 1939 insofar as it relates to securities issued by TVA, and no independent trustee is required for these securities.

Federal Energy Regulatory Commission

Under the FPA, TVA is not a "public utility," a term which primarily refers to investor-owned utilities. Therefore, TVA is not subject to the full jurisdiction that FERC exercises over public utilities under the FPA. TVA is, however, an "electric utility" and a "transmitting utility" as defined in the FPA and, thus, is directly subject to certain aspects of FERC's jurisdiction. Under the FPA, for example, TVA (1) must comply with certain standards designed to maintain transmission system ~~reliability,~~reliability; (2) can be ordered to interconnect its transmission facilities with the electrical facilities of independent generators and of other electric utilities that meet certain ~~requirements,~~requirements; (3) can be ordered to transmit wholesale power provided that the order (a) does not impair the reliability of the TVA or surrounding systems, ~~and~~ (b) meets the applicable requirements concerning terms, conditions, and rates for service, ~~as well as~~and (c) does not implicate the ~~anti-cherrypicking provision,~~ACPA; (4) iscould be subject to FERC review of the transmission rates and the terms and conditions of service that TVA ~~provides,~~provides; and (5) is prohibited from (a) 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 and (b) using manipulative or deceptive devices or contrivances in connection with the purchase or sale of power or transmission services subject to FERC's jurisdiction.

In addition, the FPA provides FERC with authority (1) to order refunds of excessive prices on short-term sales (transactions lasting 31 days or less) by all market participants, including TVA, in price gouging situations if such sales are through an independent system operator or regional transmission organization under a FERC-approved ~~tariff,~~tariff; (2) 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,~~TVA; (3) to investigate electric industry practices, including TVA's operations that are subject to FERC's ~~jurisdiction,~~jurisdiction; and (4) to impose civil penalties of up to $1 million per day for each violation of the provisions of the FPA discussed in the prior paragraph that are applicable to TVA. Criminal penalties may also result from such violations.

Finally, while not required to do so, TVA has elected to implement various FERC orders and regulations pertaining to public utilities on a voluntary basis to the extent that they are consistent with TVA's obligations under the TVA Act.

NERC Compliance

TVA is subject to federal reliability standards that are set forth by NERC and approved by FERC. These standards are designed to maintain the reliability of the bulk electric system, including TVA's generation and transmission system, and include areas such as maintenance, training, operations, planning, modeling, critical infrastructure, physical and cyber security, vegetation management, and facility ratings. TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems.

Nuclear Regulatory Commission

TVA operates its nuclear facilities in a highly regulated environment and is subject to the oversight of the NRC, an independent federal agency that sets the rules that users of radioactive materials must follow. The NRC has broad authority to impose requirements relating to the licensing, operation, and decommissioning of nuclear generating facilities. In addition, if TVA fails to comply with requirements promulgated by the NRC, the NRC has the authority to impose fines, shut down units, or modify, suspend, or revoke TVA's operating licenses. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources.

Environmental Protection Agency

TVA is subject to regulation by the EPA in a variety of areas, including air quality control, water quality control, and management and disposal of solid and hazardous wastes. See Environmental Matters below. and Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges.

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States

The Supremacy Clause of the U.S. Constitution prohibits states, without federal legislative consent, from regulating the manner in which the federal government conducts its activities. As a federal agency, TVA is exempt from regulation, control, and taxation by states except in certain areas where Congress has clearly made TVA subject to state regulation. See Environmental Matters below.

Other Federal Entities

TVA's activities and records are also subject to review to varying degrees by other federal entities, including the Government Accountability Office and the Office of Management and Budget ("OMB"). There is also an Office of the Inspector General which reviews TVA's activities and records.

Taxation and Tax Equivalents

TVA is not subject to federal income taxation. In addition, neither TVA nor its property, franchises, or income is subject to taxation by states or their subdivisions. The TVA Act, however, does require TVA to make tax equivalent payments to states and counties in which TVA conducts power operations or in which TVA has acquired properties previously subject to state and local taxation. The total amount of these payments is five percent of gross revenues from the sale of power during the preceding year excluding sales or deliveries to other federal agencies and off-system sales with other utilities, with a provision for minimum payments under certain circumstances. Except for certain direct payments TVA is required to make to counties, distribution of tax equivalent payments within a state is determined by individual state legislation.

Environmental Matters

TVA's activities, particularly its power generation activities, are subject to comprehensive regulation under environmental laws and regulations relating to air pollution, water pollution, and management and disposal of solid and hazardous wastes, among other ~~issues.~~matters. Emissions from all TVA-owned and operated units (including small combustion turbine units of less than 25 MW) have been reduced from historic peaks. Emissions of nitrogen oxide ("NO_x") have been reduced by 9697 percent below peak 1995 levels and emissions of sulfur dioxide ("SO₂") have been reduced by 99 percent below 1977 levels through CY ~~2018.~~2020. For CY ~~2018,~~2020, TVA's ~~emission~~emissions of carbon dioxide ("CO₂") from its ~~sources was 52~~owned and operated units, including purchased power and REC retirement adjustments which reduce the CO2 emissions, were 43 million tons, resulting in a 51TVA system average, as delivered, CO2 emission rate of 562 lbs/MWh. This represents a 63 percent reduction in mass carbon emissions from 2005 levels. ~~This amount includes 5,037 tons from units rated at less than 25 MW.~~ To remain consistent and to align with the EPA's reporting requirements, TVA intends to continue reporting CO₂ emissions on a calendar year basis.

Additional quantitative emissions data is as follows:



Emissions and Intensity Rates (1)	2020	2019
Nitrogen Oxide (NOx)(2)
Total NOx Emissions (MT)	12,577	19,430
Total NOx Emissions Intensity (MT/Net MWh)	0.000094	0.000140
Sulfur Dioxide (SO2)(2)
Total SO2 Emissions (MT)	17,082	26,972
Total SO2 Emissions Intensity (MT/Net MWh)	0.000127	0.000194
Mercury (Hg)
Total Hg Emissions (kg)	17.5	50.1
Total Hg Emissions Intensity (kg/Net MWh)	0.0000001	0.0000004

Notes

(1) Intensity rates are calculated based on generation from TVA's most recent fiscal year for years indicated and emissions data from the most recent calendar years.

(2) Emissions data is consistent with Edison Electric Institute Environmental, Social, Governance and Sustainability Report standards, which are based on metric tons ("MTs") whereas overall CO2 emission rates and baseline reductions from historical levels are based on short tons.

Clean Air Act

The CAA establishes a comprehensive program to protect and improve the nation's air quality and control sources of air pollution. The major CAA programs that affect TVA's power generation activities are described below.

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National Ambient Air Quality Standards. The CAA requires the EPA to set National Ambient Air Quality Standards ("NAAQS") for certain air pollutants. The EPA has done this for ozone, particulate matter ("PM"), SO₂, nitrogen dioxide, ~~("NO~~₂~~"),~~ carbon monoxide, and lead. Over the years, the EPA has made the NAAQS more stringent. Each state must develop a plan to be approved by the EPA for achieving and maintaining NAAQS within its borders. These plans impose limits on emissions from pollution sources, including TVA fossil fuel-fired plants. Areas meeting a NAAQS are designated as attainment areas. Areas not meeting a NAAQS are designated as non-attainment areas, and more stringent requirements apply in those areas, including stricter controls on industrial facilities and more complicated permitting processes. TVA fossil fuel-fired plants can be impacted by these requirements. All TVA generating units are located in areas designated as in attainment with NAAQS.

Cross-State Air Pollution Rule. The EPA issued the Cross-State Air Pollution Rule ("CSAPR") in ~~July~~ 2011 requiring several states in the eastern U.S. to improve air quality by reducing power plant emissions that contribute to pollution in other states. In 2016, the EPA issued an update to CSAPR to address cross-state air pollution (the "CSAPR Update Rule"). The EPA subsequently issued an additional rule to resolve any remaining cross-state air pollutant issues ("CSAPR Close-Out Rule"). The

U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") ~~has~~ remanded a portion of the CSAPR Update Rule back to the EPA to address its failure to require upwind states to eliminate substantial contributions to downwind ~~nonattainment~~non-attainment areas by the statutory deadline. The D.C. Circuit also vacated the CSAPR Close-Out Rule. ~~TVA has not had and does not currently anticipate significant changes~~On March 15, 2021, the EPA Administrator signed the final revisions to ~~its operations based on~~ the CSAPR Update ~~Rule~~Rule. The revisions address the defects identified by the D.C. Circuit and ~~CSAPR Close-Out Rule~~took effect on June 29, 2021. In this final action, the EPA reduced ozone-season NOx allowances for a group of 12 states, including Kentucky, and required sources in ~~its current form.~~those states to surrender most of their banked allowances.TVA's Shawnee Fossil Plant ("Shawnee") facility is affected by these revisions, and TVA is in the process of analyzing compliance strategies to determine how any shortage in allowances will be overcome for the ozone season in 2022 and beyond.

Mercury and Air Toxics Standards for Electric Utility Units. ~~Following litigation over the Mercury and Air Toxics Standards ("MATS") and the question of whether~~In April 2020, the EPA ~~was required to consider cost before deciding whether~~issued a final rule which revokes the agency's earlier finding that regulation of hazardous air pollutants ("HAP") emitted from steam electric utilities ~~was~~is appropriate and necessary, the EPA released a proposed finding that it is not appropriate and necessary to regulate HAP emissions from steam electric utilities. However, the EPA also proposed that notwithstanding this new finding, it wouldnecessary. The rule does not remove electric generating units from the source categories listed under Section 112 of the CAA ~~and~~nor does it ~~would not~~ rescind the ~~MATS~~Mercury and Air Toxics Standards ("MATS") requirements. Additionally, the EPA ~~proposed to find~~determined that further restrictions on HAP emissions are not warranted ~~upon conducting~~based on a residual risk and technology review ("RTR") for this source category. ~~Until a~~TVA does not anticipate that the final rule ~~is issued, specific impacts to TVA cannot be determined; however, as proposed, the rule is not expected to~~will change TVA's MATS compliance requirements or strategy. Certain states and environmental groups filed petitions in the D.C. Circuit challenging the "appropriate and necessary" finding and the RTR finding. On February 16, 2021, the EPA filed a motion requesting the D.C. Circuit to hold the cases in abeyance pending the agency's review of the final rule under Executive Order ("EO") 13990, which, among other things, requires the EPA to reconsider the final rule by August 2021. The EPA did not meet the August 2021 deadline, but is expected to issue a proposed rule that reverses the findings of the April 2020 final rule. TVA will evaluate the proposal when it is issued.

Environmental Agreements. See Note 2223 —Commitments and Contingencies —Legal Proceedings—Environmental Agreements for a discussion of two substantively similar agreements into which TVA entered in April 2011: one with the ~~Environmental Agreements,~~EPA and the other with Alabama, Kentucky, North Carolina, Tennessee, and three environmental advocacy groups: the Sierra Club, the National Parks Conservation Association, and Our Children's Earth Foundation (collectively, the "Environmental Agreements"), which discussion is incorporated herein by reference.

Acid Rain Program. The Acid Rain Program is intended to help reduce emissions of SO₂ and NO_x, which are the primary pollutants implicated in the formation of acid rain. The program includes a cap-and-trade emission reduction program for SO₂ emissions from power plants. TVA continues to reduce SO₂and NO_x emissions from its coal-fired plants, and the SO₂ allowances allocated to TVA under the Acid Rain Program are sufficient to cover the operation of its coal-fired plants. In the TVA service area, the limitations imposed on SO₂ and NO_xemissions by the CSAPR program are more stringent than the Acid Rain Program. Therefore, TVA ~~forecasts~~does not anticipate that the Acid Rain Program will ~~not~~ impose any additional material requirements on TVA.

Regional Haze Program. The EPA issued the Clean Air Visibility Rule, which required certain older sources to install best available retrofit technology. No additional controls or lower operating limits are required for any TVA units to meet best available retrofit technology requirements. In ~~January~~ 2017, the EPA published the final rule that changed some of the requirements for Regional Haze State Implementation Plans ("SIPs"). ~~TVA does not expect significant impacts to its operations from these changes, but specific~~Specific impacts cannot be determined until future Regional Haze SIPs are ~~developed.~~developed for the next decennial review under the visibility haze provisions of the CAA. States were required to submit their Regional Haze SIPs to the EPA by July 31, 2021. In response to requests from state air pollution control agencies in Tennessee and Kentucky, TVA submitted regional haze analyses for Cumberland Fossil Plant ("Cumberland") and Shawnee. The reports evaluate SO2 emission reduction options for these facilities and will be used by these state agencies in preparing their Regional Haze SIPs.

Opacity. Opacity, or visible emissions, measures the denseness (or color) of power plant plumes and has traditionally been used by states as a means of monitoring good maintenance and operation of particulate control equipment. Under some conditions, retrofitting a unit with additional equipment to better control SO₂ and NO_x emissions can adversely affect opacity performance, and TVA and other utilities have addressed this issue. The evaluation of utilities' compliance with opacity requirements is coming under increased scrutiny, especially during periods of startup, shutdown, and malfunction. Historically, SIPs developed under the CAA typically excluded periods of startup, shutdowns, and malfunctions, but in June 2015, the EPA finalized a rule to eliminate such ~~exclusions.~~exclusions ("2015 Rule"). The ~~EPA rule~~2015 Rule required states to modify their implementation plans

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by November 2016. Kentucky, Tennessee, and Mississippi submitted implementation plans, but Alabama has not. Environmental petitioners and several states filed petitions for judicial review of the ~~EPA final rule~~2015 Rule before the D.C. Circuit. In April 2017, the D.C. Circuit, at the request of the ~~new~~ EPA Administrator, ordered this litigation to be suspended pending the EPA's review to determine whether to reconsider all or part of the ~~rule. TVA does not expect significant impacts from these rule changes.~~

~~Petition to Expand the Ozone Transport Region~~.In December 2013, eight of the twelve states that make up the Ozone Transport Region ("OTR") submitted a petition requesting the EPA to add nine states, including Kentucky and Tennessee, to the OTR. If states within TVA's service territory were included in the OTR, TVA would be required to further reduce NO_x emissions. Six of the states filed suit when the EPA failed to act on the petition. In January 2017, the EPA subsequently published a notice in the Federal Register proposing to deny the petition on the basis that the CAA provides other options. The EPA then denied the petition in2015 Rule. On October 2017. In December 2017, the eight petitioning states filed in the D.C. Circuit a petition for judicial review of the EPA's denial of the petition to add states to the OTR. On April 23, 2019, the D.C. Circuit denied the petition for judicial review of the EPA's refusal to expand the OTR to include nine additional states.

~~Kentucky Startup/Shutdown Regulations~~. In April 2018, the Kentucky Division for Air Quality published final revised startup/shutdown regulations for new and existing indirect heat exchangers. Shawnee Fossil Plant ("Shawnee") and Paradise have boilers which will be subject to these rules when incorporated into their air permits. The revised rules do not significantly impact operations at Shawnee or Paradise.

~~Kentucky State Implementation Plan to Address Downwind Ozone Impacts~~. Emissions from utility units in Kentucky that contribute to ozone are already limited by the CSAPR Update Rule and are declining. In February 2018, Kentucky submitted a proposed revision to its SIP to address downwind state ozone impacts. The proposed SIP did not require emission reductions beyond current requirements, and in July 2018,9, 2020, the EPA issued a ~~final rule approving Kentucky's revised SIP. No additional emission reductions are required by~~guidance memorandum ("2020 Memorandum") that superseded and replaced policy statements outlined in the 2015 Rule. On September 30, 2021, the EPA withdrew the 2020 Memorandum, reinstating the agency's prior policy as set out in the 2015 Rule. The EPA's evaluation of state SIPs will be undertaken in light of the considerations outlined in the September 30, 2021 memorandum. TVA cannot predict the outcome of future SIP ~~for TVA's Kentucky generating units.~~evaluations.

New York Petition to Address Impacts from Upwind High Emitting Sources. In ~~March~~ 2018, the State of New York filed a petition with the EPA under Section 126(b) of the CAA to address ozone impacts on New York from the NO_x emissions from sources emitting at least 400 tons of NO_x in CY 2017 from nine states including Kentucky. The New York petition requests that the EPA require daily NO_x limits for utility units with ~~SCRs~~selective catalytic reduction systems ("SCRs") such as ~~Paradise Unit 3~~Shawnee Units 1 and 4 and emission reductions from utility units without SCRs such as Shawnee Units 2, 3, and 5-9. Kentucky utility unit NO_x emissions are already limited by the CSAPR Update Rule and are declining, and current EPA modeling projects no additional requirements to reduce Kentucky NO_x emissions are necessary. ~~During its February 2019 meeting, the TVA Board approved the retirement of Paradise Unit 3 by December 2020. On September 20,~~In 2019, the EPA finalized its denial of New York's petition because the state did not demonstrate, and the EPA could not independently establish, that sources in the states listed in the petition contribute to exceedances of the 2008 and 2015 ozone NAAQS in New York. ~~On October 29, 2019, the state~~The State of New York filed a petition in the D.C. Circuit for judicial review of the EPA's denial of the petition. In July 2020, the D.C. Circuit vacated the EPA's denial of the petition and remanded the petition to the EPA for reconsideration. In its recently published Unified Regulatory Agenda, the EPA indicated that it will respond to the D.C. Circuit's decision by providing a revised response to New York's Section 126(b) petition. Specific impacts to TVA ~~as a result of the filing of the petition for judicial review~~ cannot be determined ~~at this time.~~until the EPA takes further action on the petition.

Affordable Clean Energy Rule. ~~On June 19,~~In 2019, the EPA finalized the ~~final~~ Affordable Clean Energy ("ACE") rule and repealed the EPA's previous regulation addressing greenhouse gas ("GHG") emissions from existing fossil fuel-fired units. The ACE rule ~~establishes~~established guidelines for GHG emissions from existing coal-fired units based on efficiency improvements that can be achieved at those units at reasonable cost. ~~States are required~~Several industry, environmental, and state and local petitioners filed for judicial review of the ACE rule. On January 19, 2021, the D.C. Circuit vacated and remanded the ACE rule, and specified that the court's mandate will not issue with regard to ~~apply~~ the ~~emission guidelines to coal-fired units within their respective jurisdictions and take into account the remaining useful lives of those units. The impact~~portion of the ACE rule ~~on TVA's coal-fired units cannot be determined~~that repeals the Clean Power Plan until ~~Tennessee and Kentucky submit to~~after the EPA ~~their SIPs implementing guidelines~~develops a replacement for the ACE rule. In Congressional hearings in February 2021, the EPA Administrator stated that the EPA will propose a new rule to regulate CO2 emissions from electric generating units. On April 29, 2021, a coalition of states asked the Supreme Court to reverse the D.C. Circuit's decision to vacate and remand the ACE rule. TVA is unable to predict the future course of this litigation on appeal, nor the direction that the EPA may take in the ~~ACE rule and the EPA approves these SIPs. The ACE rule allows states three years~~future to ~~submit their SIPs and allows the EPA 18 months for approval.~~regulate GHG emissions from fossil fuel-fired units.

New Source Performance Standards. ~~On December 6,~~In 2018, the EPA proposed revisions to the GHG emission standards for new, modified, and reconstructed electric utility generating units ~~that were finalized by~~required under Section 111(b) of the ~~EPA in October 2015.~~CAA. For coal-fired units, the EPA proposes to revise the current new source standards such that carbon capture and sequestration technology is no longer necessary to meet the standards of performance that reflect the best system of emission reduction. The resulting limits are less stringent than limits under the current rule and can be met by modern coal-fired units (e.g., supercritical steam generators) in combination with best operating practices, but without carbon capture and sequestration. The EPA is not proposing to revise the new source performance standard for GHG emission from gas-fired units. In January 2021, the EPA published criteria in the Federal Register for making a significant contribution finding for GHGs from a source category for the purpose of regulating those emissions under Section 111(b) of the CAA, and the EPA did not take final action on the 2018 proposed revisions in this rulemaking. On March 17, 2021, the EPA asked the D.C. Circuit to vacate and remand the "significant contribution" finding since the rule was promulgated without public notice or opportunity to comment. On April 5, 2021, the D.C. Circuit vacated and remanded the January 2021 final rule. If finalized as proposed, the revisions are not expected to significantly impact TVA since TVA does not currently plan to construct, modify, or reconstruct any coal-fired units.

~~Maryland Petition to Address Impacts from Upwind Electric Generating Units. In September 2017,~~Climate Change

Executive Actions. On January 20, 2021, President Biden issued EO 13990, "Protecting Public Health and the ~~State of Maryland filed a lawsuit against~~Environment and Restoring Science To Tackle the ~~EPA for failing to act within 60 days on Maryland's petition under Section 126 of the CAA to address ozone impacts on Maryland from the NO~~_x emissions of 36 electric generating units, including TVA's Paradise coal-fired Unit 3. Paradise coal-fired Unit 3 is equipped with a SCR that TVA continuously operates to the greatest extent technically practicable in order to minimize NO_x emissions. The EPA has denied the petition because existing regulations already address emissions from the generating units at issue. On October 15, 2018, the State of Maryland filed a petition for judicial review with the D.C. Circuit asking the courtClimate Crisis." EO 13990 directs federal agencies to review ~~the EPA's decision.~~

~~Climate Change~~

~~Executive Actions.~~ ~~In March 2017, President Trump issued Executive Order ("EO") 13783, "Promoting Energy Independence~~ and ~~Economic Growth." The EO reversed or altered many actions taken by the federal government in the last four years of the Obama Administration~~revise regulations consistent with broad policy goals to address climate change and mandates that federal agencies review existing regulations and actions that potentially burden energy development and use. Several EOs, policy statements, and reports that established climate change objectives were rescinded or revoked. EO 13783 did not mandate that the EPA reconsider its finding under the CAA that GHG emissions cause climate change and therefore endangerimprove public health and the ~~environment.~~ environment, reduce GHG emissions, and prioritize environmental justice. On March 8, 2021, a coalition of 12 states filed a lawsuit in the U.S. District Court for the Eastern District of Missouri challenging President Biden's authority to establish interim values for the social cost of GHGs under EO 13990. On August 31, 2021, the court dismissed the matter, but the plaintiffs have appealed the decision to the U.S. Court of Appeals for the Eighth Circuit. A similar lawsuit is pending in the U.S. District Court for the Western District of Louisiana. EO 13990 also requires the EPA to review several environmental regulations to determine their consistency with the goals and policies prescribed in the EO. Specific impacts to TVA of EO 13990 cannot be determined at this time.

~~While~~In addition, on January 27, 2021, President Biden issued EO ~~13783 requires review~~14008, "Executive Order on Tackling the Climate Crisis at Home and Abroad." Among other things, EO 14008 expresses the following policies of the federal government: (1) to organize and deploy the full capacity of its agencies to combat the climate crisis to implement a government-wide approach that reduces climate pollution in every sector of the economy, (2) to align the management of federal procurement and real property, public lands and waters, and financial programs to support robust climate action, (3) to use all ~~agency actions~~available procurement authorities to achieve or facilitate (a) a carbon pollution-free electricity sector no later than 2035 and (b) clean and zero-emission vehicles for

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federal, state, local, and tribal government fleets, (4) to put the U.S. on a path to achieve net-zero emissions, economy-wide, by no later than 2050, (5) to accelerate the deployment of clean energy and transmission projects in an environmentally stable manner, (6) to ensure that, ~~potentially burden~~to the ~~safe, efficient~~extent consistent with applicable law, federal funding is not directly subsidizing fossil fuels, (7) to promote the flow of capital toward climate-aligned investments and away from high-carbon investments, (8) improve air and water quality, and (9) secure an equitable economic future by making environmental justice part of an agency's mission. TVA is closely monitoring these developments, including the Justice40 Initiative, the Department of Treasury effort to establish a carbon market, establishment and development of ~~domestic energy resources,~~ the Civilian Climate Corps, and establishment of several White House comprehensive plans. In addition, EO 14008 created the Special Presidential Envoy for Climate and called for an early Leaders' Climate Summit aimed at raising climate ambition and making a positive contribution to the 26th United Nations Climate Change Conference of the Parties and beyond. EO 14008 also stated the U.S. would reconvene the Major Economies Forum on Energy and Climate, beginning with the Leader's Climate Summit. Federal agencies were directed to update their Climate Change Action Plans, and TVA submitted its draft plan in May 2021 and submitted its final plan in August 2021. Aside from the directive to update TVA’s Climate Change Action Plan, specific ~~requirements and~~ impacts ~~from implementation~~ of ~~this~~ EO ~~are not possible to predict~~14008 on TVA cannot be determined at this time. ~~It is likely that there will be some delay in~~

On May 20, 2021, President Biden also issued EO 14030, “Climate-Related Financial Risk,” which calls for a governmental-wide strategy on the disclosure of climate-related financial risk. EO 14030 requires the development of ~~future GHG reduction requirements.~~

~~In May 2018, EO 13834, "Efficient Federal Operations," was signed. EO 13834 emphasizes meeting statutory requirements~~government-wide strategy regarding the following: (1) the measurement, assessment, mitigation, and ~~gives agencies greater flexibility~~disclosure of climate-related financial risk to federal government programs, assets, and ~~discretion to decide how best to improve operations~~liabilities in order to ~~"optimize energy~~increase the long-term stability of federal operations; (2) financing needs associated with achieving net-zero greenhouse gas emissions for the U.S. economy by no later than 2050, limiting global average temperature rise to 1.5 degrees Celsius, and adapting to the acute and chronic impacts of climate change; and (3) areas in which private and public investments can play complementary roles in meeting these financing needs while advancing economic opportunity, worker empowerment, and environmental ~~performance, reduce waste,~~mitigation, especially in disadvantaged communities and ~~cut costs." It also calls on~~communities of color. While TVA is subject to this EO, the ~~White House Council~~specific impacts of Environmental Quality to streamline pre-existing environmental orders by "refocusing agencies on cost-effectively meeting mandates and goals" established by law. The order seeks to consolidate requirements related to energy and water efficiency, high performance buildings, renewable energy consumption, and federal vehicle fleet management. TVA consistently seeks to improve its operations in order to optimize energy and environmental performance and does not anticipate significant changes in its planning or operations as a result of the new EO.EO 14030 cannot be determined at this time.

International Accords. In September 2016, the U.S. formally accepted the Paris Agreement. The agreement met the threshold of at least 55 countries that account for at least 55 percent of global GHG emissions and formally entered into force in November 2016. ~~The durability of the Paris Agreement commitments is uncertain after President Trump's announcement in~~

~~June 2017 that the U.S. would withdraw from the agreement.~~ On November 4, 2019, the ~~United States~~U.S. formally notified the United Nations that it would withdraw from the agreement. Under the terms of the agreement, the effective date for the withdrawal ~~will be~~was November 4, 2020.

On January 20, 2021, President Biden formally rejoined the Paris Agreement on behalf of the U.S. The means for tracking emissions targets under the Paris Agreement are nationally determined contributions ("NDCs"). Each nation that is a party to the Paris Agreement is asked to prepare five-year, successive NDCs that it plans to achieve. On April 22, 2021, the Biden Administration announced its GHG NDCs for 2030 under the Paris Agreement, and these NDCs establish a new target for the U.S. to achieve a 50 to 52 percent reduction from 2005 levels in economy-wide net GHG pollution in 2030. Specific impacts to TVA cannot be determined at this time.

In response to President Trump's Paris withdrawal announcement, 25 states have formed the U.S. Climate Alliance, a bipartisan coalition of governors committed to reducing GHG emissions consistent with the goals of the Paris Agreement. North Carolina and Virginia are the only states in the TVA region that are U.S. Climate Alliance members. Among other commitments, each state commits to implement policies that advance the goals of the Paris Agreement, aiming to reduce GHG emissions by at least 26-28 percent below CY 2005 levels by CY 2025 and to accelerate new and existing policies to reduce carbon pollution and promote clean energy deployment at the state and federal level. In June 2017, America's Pledge was announced as a collaborative opportunity for these states to work with U.S. cities and businesses representing more than half of the U.S. economy. In September 2018, America's Pledge released its economy-wide policy analysis with recommendations of how states, cities, businesses, and other stakeholders can influence U.S. decarbonization. It is premature to determine potential impacts to TVA.

Litigation. In addition to legislative activity, climate change issues have been the subject of a number of lawsuits, including lawsuits against ~~TVA. See Note 22 for~~TVA, and TVA may be subject to additional ~~information.~~lawsuits in the future.

Indirect Consequences of Regulation or Business Trends. Legal, technological, political, and scientific developments regarding climate change may create new opportunities and risks. The potential indirect consequences could include an increase or decrease in electricity demand, increased demand for clean generation from alternative energy sources, and subsequent impacts to business reputation and public opinion. See Power Supply and Load Management Resources above.

Physical Impacts of Climate Change. ~~TVA manages the potential effects~~Physical impacts of climate change onmay include, but not be limited to, changing weather patterns, extreme weather conditions, and other events such as flooding, droughts, wildfires, and snow or ice storms, and these events can impact TVA's system in terms of system operability, customer demand, and the health of regional economies. TVA has a Climate Change Action Plan which it updated in 2021 in accordance with EO 14008. TVA submitted its ~~mission, programs,~~draft Climate Change Action Plan in May 2021 and ~~operations within~~ its ~~environmental management processes.~~final plan in August 2021. The goal of the ~~adaptation~~action planning process is to ensure TVA continues to achieve its mission and program goals and to operate in a secure, effective, and efficient manner in a changing climate by integrating climate change adaptation efforts in coordination with state and local partners, tribal governments, and private stakeholders. ~~TVA's Climate Change Adaptation Plan was last updated in June 2018.~~TVA manages the potential effects of climate change on its mission, programs, and operations within its environmental management processes.

Actions Taken by TVA to Reduce GHG Emissions. TVA has reduced GHG emissions from both its generation ~~stations~~facilities and its operations. ~~As discussed earlier in this Item 1, Business, recent~~ TVA Board actions have focused on TVA's plan to balance its coal-fired generation by increasing its nuclear capacity, modernizing its hydroelectric generation system, increasing natural gas-fired generation, installing emission control equipment on certain of its coal-fired units, increasing its purchases of renewable energy, building solar facilities, and investing in energy efficiency initiatives to reduce energy use in the Tennessee Valley. Additionally, TVA has invested to ~~reduce~~increase energy ~~use~~efficiency in its operations. The combination of more stringent environmental regulations, lower natural gas prices, and lower demand for energy across the Tennessee Valley has reduced the utilization of coal-fired generation. These factors have resulted in lower CO₂ emissions from the TVA ~~system.~~system, as previously discussed in this section. As TVA evolves its generation portfolio, and after appropriate environmental review under NEPA, the TVA Board could make decisions about the timing, retirement, and replacement of aging fossil units or other expiring capacity, which may further TVA’s CO2 and other emissions reductions. The Environmental Policy also provides additional direction in several environmental stewardship areas related to reducing environmental impacts on the Valley's natural resources, including reducing carbon intensity and air emissions.

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Renewable/Clean Energy Standards

~~Twenty-nine~~ Thirty states and the District of Columbia have established enforceable or mandatory requirements for electric utilities to generate a certain amount of electricity from renewable sources. ~~One state~~Two states within the TVA service area, North Carolina ~~has a~~and Virginia, have mandatory renewable ~~standard~~standards that, while not applying directly to TVA, ~~does~~do apply to TVA's LPCs serving retail customers in ~~that state.~~those states. TVA's policy is to provide compliance assistance to any distributor of TVA power, and TVA is providing assistance to the covered LPCs that sell TVA power in North Carolina. In 2020, Virginia signed into law the Clean Economy Act. The Act establishes a mandatory requirement for utilities to generate a certain amount of electricity from renewable sources. At this time, TVA is not impacted by the legislation due to the relatively small amount of electricity that TVA provides in Virginia compared to other utilities. Likewise, the Mississippi Public Service Commission adopted an energy efficiency rule applying to electric and natural gas providers in the state, and TVA is supplying information on participation in TVA's energy efficiency programs to support the covered Mississippi LPCs.

Water Quality Control Developments

Waters of the United States. In 2015, the EPA and the USACE issued the Clean Water Rule, which redefined waters of the United States ("WOTUS") in the agencies' regulations for the first time since the 1980s and was intended to clarify the regulatory jurisdiction of the EPA and the USACE ("2015 WOTUS Rule"). In April 2020, the USACE and the EPA issued the Navigable Waters Protection Rule (“NWPR”), which established a new regulatory definition of WOTUS and replaced the definition set forth in the 2015 WOTUS Rule. The NWPR established four categories of waters considered jurisdictional under the CWA: (1) territorial seas and traditional navigable waters, (2) perennial and intermittent tributaries to those waters, (3) certain lakes and ponds, and impoundments of jurisdictional waters, and (4) wetlands adjacent to jurisdictional waters. The rule excluded twelve categories of waters, including ephemerals, groundwater, many ditches, and waste treatment systems. The NWPR reduced the jurisdictional reach of the CWA and could potentially reduce permitting and mitigation requirements for TVA projects that impact waters that were previously considered jurisdictional under the 2015 WOTUS Rule. The NWPR was challenged in multiple courts, and on August 30, 2021, it was vacated by the United States District Court for the District of Arizona. The United States District Court for the District of New Mexico also vacated it on September 27, 2021. Two other courts declined to vacate the rule, but remanded it to the EPA and the Army Corps of Engineers. Previously, on June 9, 2021, the EPA and the Department of the Army announced their intention to initiate a new rulemaking process to restore the definition of WOTUS that was in place prior to the 2015 WOTUS Rule and to develop a new rule to establish a new definition of WOTUS. The impact of the rulemaking process cannot be ascertained fully at this time. Pending the completion of the rulemaking process, the EPA and the USACE are interpreting WOTUS consistent with the pre-2015 definition.

Cooling Water Intake Structures. In ~~May~~ 2014, the EPA released a final rule under Section 316(b) of the ~~Clean Water Act~~CWA relating to cooling water intake structures ("CWIS") for existing power generating facilities. The rule requires changes in CWIS used to cool the vast majority of coal, gas, and nuclear steam-electric generating plants and a wide range of manufacturing and industrial facilities in the U.S. The final rule requires CWIS to reflect the best technology available for minimizing adverse environmental impacts, primarily by reducing the amount of fish and shellfish that are impinged or entrained at a ~~cooling water intake structure.~~CWIS. These new requirements will potentially affect a number of TVA's fossil- and nuclear-fueled facilities and will likely require capital upgrades to ensure compliance. Most TVA facilities are projected to require retrofit of CWIS with "fish-friendly" screens and fish return systems to achieve compliance with the new rule. The rule is being implemented through permits issued under the National Pollutant Discharge Elimination System ("NPDES") in Section 402 of the ~~Clean Water Act.~~CWA. State agencies administer the NPDES permit program in most states including those in which TVA's facilities are located. In addition, the responsible state agencies must provide all permit applications to the U.S. Fish &and Wildlife Service for a 60-day review prior to public notice and an opportunity to comment during the public notice. As a result, the permit may include requirements for additional studies of threatened and endangered species arising from U.S. Fish &and Wildlife Service comments and may require additional measures be taken to protect threatened and endangered species and critical habitats directly or indirectly related to the plant cooling water intake. TVA's review of the final rule indicates that the rule offers adequate

flexibility for cost-effective compliance. The required compliance timeframe is linked to ~~plant specific~~plant-specific NPDES permit renewal cycles (i.e., technology retrofits), and compliance is expected to be required beginning in the ~~CYs 2022-2024~~CY 2022 - 2024 timeframe.

The EPA has never previously applied the requirements under Section 316(b) to hydroelectric facilities. However, on September 30, 2021, EPA Region 10, which covers an area outside TVA’s service area, issued NPDES permits to four hydroelectric plants that include Section 316(b) requirements. In determining the best technology available (“BTA”) to minimize adverse impacts on the environment using best professional judgment, Region 10 analyzed the existing controls that the hydroelectric facilities were already implementing and concluded that those controls constitute BTA. It is not clear whether this approach will be adopted nationwide or how the BTA standard would be applied to TVA's hydroelectric facilities; accordingly, the specific impacts to TVA from the new Region 10 permits cannot be determined at this time.

Hydrothermal Discharges. The EPA and many states continue to focus regulatory attention on potential effects of hydrothermal discharges. Many TVA plants have variances from thermal standards under Section 316(a) of the ~~Clean Water Act~~CWA that are subject to review as NPDES permits are renewed. Specific data requirements in the future will be determined based on negotiations between TVA and state regulators. If plant thermal limits are made more stringent, TVA may have to install cooling towers at some of its plants and operate installed cooling towers more often. This could result in a substantial cost to TVA.

Steam-Electric Effluent Guidelines. In 2015, the EPA revised existing steam-electric effluent limitation guidelines ("ELGs"), which regulate water discharge pollutants and require the application of certain pollutant control technologies. The

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2015 ELGs ~~establish~~established more stringent performance standards for existing and new sources and ~~will require~~required major upgrades to wastewater treatment options at all coal-fired plants. Compliance with new requirements was originally required in the CYs 2018-2023 timeframe, but the EPA delayed the compliance dates for flue gas desulfurization ("FGD") wastewater and bottom ash transport water until CYs ~~2020-2023~~2020 - 2023 to allow the EPA time to review and potentially revise the ELGs with regard to these waste streams.

In ~~August 2017,~~October 2020, the EPA Administrator announced his decision to conduct a rulemaking to potentially revise the new, more stringent effluent limitations that apply to bottom ash transport water and FGD wastewater in the CY 2015 ELG rule. In April 2019, the United States Court of Appeals for the Fifth Circuit ("Fifth Circuit") remanded portions of the 2015 ELG because it determined that some of the standards did not comply with statutory requirements. The EPA proposedissued final revised ELGs for bottom ash transport water and FGD ~~wastewater on November 4, 2019, but did address the portions of the ELG that were remanded by the Fifth Circuit.~~

wastewater. The primary impact for TVA is on the operation of existing coal-fired generation facilities. The ~~proposed~~ revised ELGs could impact long-term investment decisions being made relative to the long-term compliance and operability of these plants. The ~~proposed~~ revisions may require TVA to install additional wastewater treatment systems for FGD wastewater and bottom ash transport water, and TVA could incur substantial costs to comply with the new rule. In addition, the revised ELGs could cause TVA to reduce utilization of its coal-fired generation facilities or even close such facilities. The ~~proposed~~ revision also includes a subcategory for which ~~the~~ Cumberland ~~Fossil Plant (“Cumberland”)~~ would qualify that provides TVA greater flexibility in meeting the ELGs. ~~However, given~~The revision includes two additional subcategories for low utilization units and units that ~~these~~cease coal combustion by the end of CY 2028. TVA is evaluating the applicability of those subcategories to its plants as appropriate. In October 2021, TVA filed Notices of Planned Participation preserving the option for TVA's Bull Run, Cumberland, and Kingston plants to participate in the subcategory for units that cease coal combustion by the end of CY 2028.

Petitions for judicial review of the October 2020 ELG rule were filed in the D.C. Circuit and the U.S. Court of Appeals for the Fourth Circuit (the "Fourth Circuit") and have been consolidated in the Fourth Circuit in the case Appalachian Voices, et al. v. EPA. On August 3, 2021, the EPA announced a supplemental rulemaking to revise the Steam Electric Power Generating Effluent Limitations Guidelines and Standards. As part of the rulemaking process, the EPA will determine whether more stringent limitations and standards are appropriate and consistent with the technology-forcing statutory scheme and the goals of the Clean Water Act. The impact of the proposed ~~rules, it is unclear what~~rulemaking cannot be fully determined at this time. Because this rulemaking could result in more stringent ELGs, the EPA has requested that the Appalachian Voices, et al. v. EPA litigation in the Fourth Circuit be held in abeyance.

Consistent with the 2020 rule, on January 8, 2021, TVA submitted requests to state regulatory authorities to modify NPDES permits for Kingston Fossil Plant ("Kingston"), Cumberland, Bull Run, Shawnee, and Gallatin Fossil Plant ("Gallatin") to incorporate into the permits limitations in the 2020 rule. The Kentucky Department for Environmental Protection released a final ~~impact to TVA will be. The proposed revisions may require TVA to install additional wastewater treatment systems~~revised permit for ~~FGD wastewater and bottom ash transport water~~Shawnee in the fourth quarter of 2021, and TVA ~~could incur substantial costs~~anticipates the Tennessee Department of Environment and Conservation ("TDEC") will issue draft permits for Kingston, Cumberland, Bull Run, and Gallatin by December 2021.

Nationwide Permits for Dredge and Fill. On January 12, 2021, the USACE published notice of a final rule that reissued and modified Nationwide Permits (“NWPs”) that authorize discharges of dredge and fill material into waters of the U.S. The final rule limits applicability of NWP 12, which previously authorized discharges from all utility line activities, to ~~comply with~~oil and natural gas pipelines, creates new NWPs for certain utility line activities, including NWP 57 for electric utility line and telecommunication activities, and modifies certain pre-construction notification requirements. The new NWP 12 is being challenged in court on the same grounds that were litigated in Northern Plains Resource Council v. U.S. Army Corps of Engineers, where the U.S. District Court for the District of Montana found the permit unlawful and vacated it. Although the new ~~rule.~~lawsuit does not challenge NWP 57, the NWP upon which TVA is most likely to rely for its utility line activities, the lawsuit raises claims that apply with equal force to NWP 57. However, the impact on TVA from this litigation cannot be evaluated fully until the legal challenge is resolved.

Other Clean Water Act Requirements. As is the case in other industrial sectors, TVA and other utilities are also facing more stringent requirements related to the protection of wetlands, reductions in storm water impacts from construction activities, new water quality criteria for nutrients and other pollutants, new wastewater analytical methods, and changes in regulation of pesticide ~~discharges.~~application.

Recent Supreme Court Decision

On April 23, 2020, in County of Maui v. Hawaii Wildlife Fund, the Supreme Court held that the CWA requires a permit when there is a direct discharge of pollutants from a point source to waters of the U.S. and when there is "the functional equivalent" of a direct discharge to such waters. The Court suggested seven factors for determining when such a discharge is the functional equivalent of a direct discharge and acknowledged that the new test would be somewhat difficult to apply, potentially requiring evaluation of multiple factors. The Court noted that "time and distance" of pollutant migration often will be the most important factor but that other relevant factors may include, for example, the nature of the material through which the pollutant travels and the extent to which the pollutant is diluted or chemically changed as it travels. After evaluating the potential impact of the decision, TVA determined that this decision will not require TVA to change its operations.

Cleanup of Solid and Hazardous Wastes

Liability for releases and cleanup of hazardous substances is imposed under the federal Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the RCRA, and other federal and parallel state statutes. In a manner similar to many other industries and power systems, TVA has generated or used hazardous substances over the years.

TVA Sites. TVA historical operations at ~~some of its~~certain facilities have resulted in ~~contamination~~releases of contaminants that TVA is addressing, including at TVA's Environmental Research Center at Muscle Shoals, Alabama. TVA has completed several removal, remedial, and characterization actions at the site, as required by a permit issued by the Alabama Department of Environmental Management. At September 30, ~~2019,~~2021, TVA's estimated liability for required cleanup and similar environmental

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work for those sites for which sufficient information was available to develop a cost estimate iswas approximately ~~$15~~$18 million and was included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheet. TVA must submit an application for renewal of the RCRA permit by September 27, 2022, and the renewal process may include additional mandates for further remedial activities. TVA has evaluated the potential impact that a permit renewal could have on its operations and does not believe that the renewal will have any adverse impacts at this time. In addition, the ~~ERC~~Environmental Research Center has an active groundwater monitoring program as part of a ~~Resource Conservation and Recovery Act ("RCRA") Corrective Action Permit.~~permitted corrective action plan.

Non-TVA Sites. TVA is aware of alleged hazardous-substance releases at certain non-TVA areas for which it may have some liability. See Note 2223 — Commitments and Contingencies — Environmental Matters.

Coal Combustion Residuals. The EPA published its final rule governing CCR in ~~April~~ 2015. The rule regulates CCR as nonhazardous waste under Subtitle D of the RCRA. While states may adopt the rule's requirements into their regulatory programs, the rule does not require states to adopt the requirements. The initial version of the rule provided for self-implementation by utilities and allows enforcement through citizen suits in federal court. The Water Infrastructure Improvements for the Nation Act ("WIIN Act") subsequently allowed state or federal-based permitting to implement the CCR ~~rule~~Rule as an alternative to self-implementation and citizen suits. ~~The rule, which became effective in October 2015, has later effective dates for certain provisions.~~ See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources — Coal Combustion ~~Residual~~Residuals Facilities for a discussion of the impact on TVA's operations, including the cost and timing estimates of related projects.

In July 2018, the EPA issued a final CCR rule which provided additional flexibility and an extension of certain deadlines. OnIn March ~~13,~~ 2019, the D.C. Circuit granted the EPA's request to remand ~~this~~the final rule to allow the EPA to reconsider the ~~amendments to the CCR Rule.~~amendments. The remand also ~~allows~~allowed the EPA ~~additional~~ time to complete a new rulemaking to establish revised timelines for unlined impoundments to initiate closure and to reexamine the October 2020 deadline for closing some unlined impoundments. OnIn August ~~14,~~ 2019, the EPA issued a proposed rule to amend portions of the CCR Rule regarding beneficial use, temporary piles, and public access to information. ~~As a result of these developments, it is not possible to predict potential impacts on TVA.~~

On November 4, 2019, the EPA announced a proposed rule that will revise portions of the CCR Rule requiring closure of unlined surface impoundments. ~~This proposal, if finalized, will require~~The final Part A rule was published in the Federal Register on August 28, 2020, and became effective September 28, 2020. Among other things, the final Part A rule required all unlined CCR surface impoundments to stop receiving CCR and non-CCR wastestreams and to initiate closure or retrofit by no later than ~~August 31, 2020. The proposed rule would allow a utility to demonstrate~~April 11, 2021, and TVA ceased doing so, and initiated closure, by the need for a short-term extension to continue to use the unlined CCR surface impoundment until November 30, 2020 if the alternative disposal capacity (i.e., new landfills or non-CCR water management systems) is not complete.specified deadline. Additionally, the ~~proposed~~final rule provides a process for a utility to seek site-specific approval from the EPA to continue to use the unlined CCR surface impoundment until ~~no later than~~ October 15, ~~2023.~~2023, and possibly longer under certain circumstances. The final rule also includes requirements that enhance the public's access to groundwater monitoring and corrective action reports. TVA does not currently anticipate the ~~proposed~~final rule will have a significant impact because TVA ~~is already planning to close~~initiated closure of its unlined CCR surface ~~impoundments.~~impoundments by the regulatory deadline and already makes groundwater monitoring and corrective action reports publicly available. A separate final Part B rule was published in the Federal Register on November 12, 2020. This rule provides an alternative liner demonstration procedure for utilities with clay lined units which are being forced to close under the Part A rule. However, TVA does not have any units which qualify for this demonstration.

In August 2015, ~~the Tennessee Department of Environment and Conservation ("TDEC")~~TDEC issued an order that (1) ~~allowed~~established a process for TDEC to oversee TVA's implementation of the EPA's CCR rule and to ensure coordination and compliance with Tennessee laws and regulations that govern the management of CCR and (2) required TVA to investigate and assess CCR contamination risks at seven of TVA's eight coal-fired plants in Tennessee and to remediate any unacceptable risks. The TDEC order does not allege that TVA is violating any CCR regulatory requirements nor does it assess TVA penalties. The TDEC order sets out an iterative process through which TVA and TDEC will identify and evaluate any CCR contamination risks and, if necessary, respond to such risks. TVA submitted to TDEC an environmental assessment report (“EAR”) for Allen in the fourth quarter of 2021. TVA is currently conducting environmental investigations for the remaining six sites in accordance with the TDEC-approved Environmental Investigation Plans and will submit EARs to TDEC upon completion of the relatedinvestigations.

~~TVA has been involved in two lawsuits concerning CCR facilities at Gallatin. These lawsuits have been resolved. See Note 22 —~~ ~~Commitments and Contingencies~~ — ~~Legal Proceedings~~ — ~~Lawsuit Brought by TDEC Involving Gallatin Fossil Plant CCR Facilities~~ ~~and~~ ~~Lawsuit Brought by TSRA and TCWN Involving Gallatin Fossil Plant CCR Facilities~~ ~~for additional information.~~

Groundwater Contamination. Environmental groups and state regulatory agencies are increasing their attention on alleged groundwater contamination associated with CCR management activities. As a result, TVA may have to change how it manages CCR at some of its plants, potentially resulting in higher costs. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources — Coal Combustion ~~Residual~~Residuals Facilitiesand — Allen Groundwater Investigation and Note 1013 — Asset Retirement ~~Obligations, and Note 22 —~~ ~~Commitments and Contingencies~~ — ~~Legal Proceedings~~ — ~~Lawsuit Brought by TDEC Involving Gallatin Fossil Plant CCR Facilities~~ ~~and~~ ~~Lawsuit Brought by TSRA and TCWN Involving Gallatin Fossil Plant CCR Facilities~~.Obligations.

Environmental Investments

From 1970 to ~~2019,~~2021, TVA spent approximately $6.8 billion on controls to reduce emissions from its coal-fired power plants. In addition, TVA has reduced emissions by idling or retiring coal-fired units and relying more on cleaner energy resources including natural gas and nuclear generation.

TVA currently anticipates spending significant amounts on environmental projects ~~through 2024,~~in the future, including investments in new clean energy generation including renewables to reduce TVA's overall environmental footprint. TVA environmental project expenditures also result from coal-fired plant decommissioning and from effective ash management modernization. Based on TVA's decisions regarding certain coal-fired units, the amount and timing of expenditures could change. See Power Supplyand Load Management Resources — Coal-Fired above and Estimated Required Environmental Expenditures below.

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SO₂ Emissions and NO_x Emissions. To reduce SO₂ emissions, TVA operates scrubbers on 1918 of its coal-fired units and switched to lower-sulfur coal at 13certain coal-fired units. To reduce NO_x emissions, TVA operates SCRs on 1918 coal-fired units, operates low-NO_x burners or low-NO_x combustion systems on 1921 units, ~~operates over-fire air on one cyclone unit,~~ optimized combustion on ~~six~~all 25 units, and operates NO_x control equipment year round when units are operating (except during start-up, shutdown, and maintenance periods). TVA has also retired 3334 of 59 coal-fired units. Except for seven units at Shawnee, the remaining coal-fired units in the TVA fleet have scrubbers and SCRs. See Power Supply and Load Management Resources — Coal-Fired above.

Particulate Emissions. To reduce particulate emissions of air pollutants, TVA has equipped all of its coal-fired units with scrubbers, mechanical collectors, electrostatic precipitators, and/or bag houses.

Greenhouse Gas Emissions. ~~There could be additional material costs if further reductions of GHGs, including CO~~₂, are mandated by legislative, regulatory, or judicial actions and if more stringent emission reduction requirements for conventional pollutants are established. These costs cannot reasonably be predicted at this time because of the uncertainty of these actions. The EPA may issue regulations establishing more stringent air, water, and waste requirements, and these requirements could result in significant changes in the structure of the U.S. power industry, especially in the eastern half of the country. There could be additional material costs if further reductions of GHGs, including CO2, are mandated by legislative, executive, regulatory, or judicial actions and if more stringent emission reduction requirements for conventional pollutants are established. These costs cannot reasonably be predicted at this time because of the uncertainty of these actions.

Estimated Required Environmental Expenditures

The following table contains information about TVA's current estimates on projects related to environmental laws and regulations.

Estimated Potential Environmental Expenditures⁽¹⁾⁽²⁾
At September 30, 2019
(in millions)
2020 2021
Thereafter⁽³⁾⁽⁴⁾
Total
Coal combustion residual conversion program⁽⁵⁾
$ 289
$ 290
$ 602
$ 1,181
Clean air control projects⁽⁶⁾
24
37
81
142
Clean Water Act requirements⁽⁷⁾
84
74
120
278


Estimated Potential Environmental Expenditures(1)(2) For the years ended September 30, 2021 (in millions)
	2022		2023		Thereafter(3)(4)		Total
Coal Combustion Residual Program(5)	$	232	$	189	$	368	$	789
Clean Air Act control projects(6)	31		38		90		159
Clean Water Act requirements(7)	77		64		7		148

Notes

(1) These estimates are subject to change as additional information becomes available and as regulations change.

(2) These estimates include ~~$254~~$134 million, ~~$207~~$75 million, and ~~$256~~$52 million for ~~the remainder of 2020, 2021,~~2022, 2023, and thereafter, respectively, in capital expenditures.

(3) See Note 2223 — Commitments and Contingencies.

(4) These estimates include expenditures expected to be incurred during ~~2022, 2023,~~2024, 2025, and ~~2024.~~2026.

(5) Includes costs associated with ~~pond closures, conversion~~the closure of ~~wet to dry handling,~~facilities and landfill activities. TVA is continuing to evaluate the rules and their impact on its operations, including the cost and timing estimates of related projects. See Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Generation Resources — Coal Combustion ~~Residual~~Residuals Facilities and Note 1213 — Asset Retirement Obligations.

(6) Includes air quality projects that TVA is currently performing to comply with existing air quality regulations, but does not include any projects that may be required to comply with potential GHG regulations or transmission upgrades.

(7) Includes projects that TVA is currently planning to comply with revised rules under the Clean Water Act regarding CWIS and ELGs for steam electric power plants.

~~Employees~~Human Capital Management

~~On September 30, 2019, TVA had 10,009~~People Strategy and TVA's Values

As 2021 remained a challenge due to the continuation of the COVID-19 pandemic, the employees of ~~whom 3,415 were trades~~TVA kept its mission in focus and ~~labor employees. Neither~~continued to create a culture that lives up to its values - Safety, Integrity, Inclusion, and Service. TVA employees collectively came together to address business needs and enable strong performance while serving the ~~federal~~10 million people of the Tennessee Valley.

As part of its People Advantage strategic priority, TVA strives to create a work environment that supports and responds to the changing needs of the workforce. People Advantage is one of TVA's five strategic priorities and a multi-year commitment to evolve TVA's culture. The recent and on-going effects of the pandemic have brought the importance of employee health, well-being and retention into sharp focus. This importance centers around TVA's valuable human capital and putting its people first. The focus on People Advantage, along with the other four strategic priorities of Operational Excellence, Financial Strength, Powerful Partnerships, and Igniting Innovation, allows TVA to fulfill its daily mission of service to the people of the Tennessee Valley.

The three initiatives in People Advantage that influence the desired TVA culture impact to the communities that TVA serves are (1) Inclusion with Diversity ("IwD"), (2) Talent, and (3) Engagement. To help shape an inclusive work environment that values all voices, TVA has intensified its efforts over the past few years to integrate diversity and inclusion into its culture and make its efforts and progress sustainable and a part of TVA's daily operations. Similarly, TVA has promoted a people-focused organization that amplifies and harnesses the energy, power, and creativity of an experienced and talented workforce - one that continues to bring about the best from its people - manifesting itself as a "destination for difference makers" for highly-skilled candidates. TVA is working to cultivate a positive employee experience to heighten workforce engagement. This work is

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focused on equipping leaders to champion engagement across the enterprise through the understanding and leveraging of employee surveys, workplace flexibility opportunities, and health, safety, and well-being programs.

Ethics

Ethics and integrity are highly valued at TVA. Since its establishment in 1933, a commitment to ethics has been a part of TVA's DNA. In 2021, TVA partnered with a third-party administrator to execute a survey that measured employees' perceptions of TVA's ethical culture. TVA is committed to leveraging the results from the survey to further strengthen TVA's strong ethical culture. TVA's Ethics & Compliance office aims to help employees make the right decisions for the right reasons and offers guidance when the right decisions may not be clear. The office is focused on educating and creating awareness while also assisting employees with ethical decision-making inside and outside of the TVA workplace. Further, TVA requires all employees and contractors to take its annual ethics training and attest to its Code of Conduct, which sets forth standards for adhering to TVA's core values and conducting its affairs with openness, honesty, and integrity every day.

TVA Board Governance and Oversight

The TVA Board’s People and Governance Committee assists the TVA Board in fulfilling its responsibilities under the TVA Act by overseeing policies and strategies that affect a wide array of people-related programs inclusive of leadership development, culture, engagement, labor relations, ~~laws covering most private sector employers nor those covering most federal agencies apply to TVA. However,~~safety, communications, compensation, performance incentives, benefits, and well-being. Specifically, the Committee advises the TVA Board in areas of overall Board governance, CEO goals, performance, compensation, and succession planning. Emergent people issues are discussed by this Committee, or in TVA Board briefings, as appropriate.The TVA Board's Audit, Finance, Risk, and Cybersecurity Committee oversees TVA's compliance and ethics programs.

Inclusion with Diversity

In 2020, the company added Inclusion as one of its core values and adopted IwD as an enterprise-wide transformational strategic element. Since then, IwD has become increasingly integrated into TVA’s daily operations. To accelerate the impact of IwD within TVA and the communities it serves, TVA is working to recognize and sustain diversity as an imperative, leveraging the public power model to advance inclusion with diversity in TVA communities.

In 2021, TVA's initiatives and accomplishments in promoting diversity and inclusion included the following:

•Established an IwD Council, comprised of senior leadership from all six strategic business units with accountability directly to TVA’s CEO and his direct reports; the council advises, champions, and oversees all IwD strategies and actions across the enterprise;

•Established a Supplier Diversity Stakeholder Advisory Council and Supplier Mentoring Program;

•Established the reinforcement of IwD by the TVA Board as an enterprise priority and goal for TVA’s CEO, which is reflected in his individual performance assessment under the annual incentive compensation program; see Item 11, Executive Compensation — Compensation Discussion and Analysis — 2021 Performance Goals and Performance Achievement — Executive Annual Incentive Plan — Individual Performance Multiplier Reinforces Pay for Performance for additional information;

•Refreshed courses to ensure that existing learning and development programs have the right level of content and emphasis on inclusion with diversity and expanded accessibility to courses through partnership with an online platform;

•Maintained an inclusion score, which measures sense of belonging, above market median at 74%; and

•Created new virtual programs for safe and open conversations about diversity and inclusion.

TVA is also advancing IwD in the communities it serves.For example, TVA is enhancing its economic development program support for women-, minority- and veteran-owned businesses.

Employee Resource Groups. TVA is powered by its people and strengthened by its diversity.TVA supports nineEmployee Resource Groups ("ERGs") to help strengthen an inclusive culture and make life better for the people it serves:

•ABLED Events — allows TVA employees to bring unique perspectives and gifts together as a united team to celebrate commonalities and differences through “Awareness Benefitting Leaders & Employees about disAbilities” in the workplace.

•ACTion — celebrates and honors the many Asian cultures represented within TVA, from Japan to India, and to the Philippines and beyond. It regularly highlights social events and supports career-enriching workshops.

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•African American Voices — provides an avenue for African American and others interested in fellowship and smart career connections within TVA. It promotes mentoring and development opportunities, as well as group workshop events on such topics as personal branding, personal finance, and networking and negotiation skills.

•IGNITE — provides TVA’s workforce with an opportunity to engage with others on various topics of interest about products, services, processes, and solutions provided by TVA; and in doing so, provides a more diverse and creative knowledge base for TVA and its employees.

•New Employee Network — makes life easier for new employees entering a large company. It provides organizational information and cross-functional connections not only on the front-end to new employees but throughout an employee’s tenure at the company.

•Spectrum — highlights the open, accepting, and safe work environment TVA provides for all employees and focuses increasing visibility on educational and social opportunities on LGBTQ+ issues by offering employees a variety of community and professional networking opportunities within the Tennessee Valley.

•TVA & Amigos — provides an avenue for TVA's Hispanic employees and those interested in Latin culture to be involved in professional, educational, and service-oriented events.

•TVA Veterans Association — allows employees unique camaraderie opportunities as they support a wide array of local and national ceremonies and events and is one of the oldest and most active resource groups at TVA, with all branches of the military represented.

•Women Empowered (WE) — supports women at all stages of their careers and advocates for the equal rights of all female employees across TVA. This extends externally as TVA supports inclusion, networking, and developmental opportunities for girls and young women in local communities.

Together, TVA and its employees collectively champion personal and professional growth through a network of professional, social, and volunteer opportunities made available by each ERG and TVA’s diverse mix of employees.

Talent

To bring out the best from its people, TVA utilizes a set of business functions that operate together to address the enterprise’s workforce needs around human capital talent selection, organization, development, engagement, and performance.

Attracting and Retaining Talent. TVA is enriched by the diversity of a talented, highly skilled workforce made up of people from all backgrounds. To achieve this, TVA endeavors to ensure that all qualified candidates receive fair consideration for open jobs at TVA and that all employees are encouraged, engaged, and empowered to contribute their talents and time while bringing their authentic selves to work each day. Recruiting efforts also support the strategic element of IwD to build a culture that lives up to TVA's values, as TVA actively recruits employees of all races, colors, sexual orientations, ethnicities, gender identities, abilities, religions, and ages. TVA continues to improve employment opportunities for underrepresented populations within TVA’s workforce, to partner with colleges and universities for internships and recent graduates, and to maintain its status as a top industry employer for military veterans.

While public reports have shown that employees in all sectors of the United States economy have been voluntarily leaving the workforce as a result of the COVID-19 pandemic at an historically high rate, TVA’s voluntary attrition rate has remained stable, and an area that TVA continues to monitor while also listening to workforce needs.TVA believes this is largely attributable to its People Advantage focus, which includes competitive compensation and comprehensive benefits programs, inclusion and well-being programs, flexible workplace practices, and an environment that promotes retention of its complex and valuable workforce.

Competitive Total Rewards. TVA’s total rewards package is a significant factor in attracting and retaining top talent. TVA’s competitive benefits portfolio supports the values and needs of its employees. TVA provides market-based and competitive compensation which includes an annual incentive plan that is designed to reward accomplishments against established business and individual goals within a given year. All eligible employees participate in TVA's annual incentive plan, including TVA's represented employee population.

Additionally, in support of its cultural commitment to IwD, TVA periodically reviews compensation practices to promote fairness and equity. TVA has engaged third party vendors to conduct independent pay equity analysis and continues to monitor its pay practices and to provide its leaders with tools to assist in making equitable pay decisions.

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To support and care for the well-being of employees and their families, examples of comprehensive and competitive benefits TVA currently offers include:


•medical, vision, dental, life, accident, and disability insurance	•paid time-off •leave donation	•health savings accounts •flexible spending accounts
•tuition reimbursement	•401(k) retirement	•dependent scholarships
•flexible work schedules	•wellness incentives	•employee assistance programs

Development and Training. As TVA continues to adapt to the evolving demands of the industry, it is imperative that it cultivate a work environment that motivates people to do their best work by aligning employee development, skills, and capabilities with what TVA needs to succeed now and in the future. TVA provides multiple training and development opportunities at all employee levels. Those opportunities include:


•individual learning-ability	•team learning	•mentoring
•career pathing, including rotational development	•professional, technical, and leadership career pathways	•over 5,000 on-line learning courses

TVA also invests in the development of its employees through tuition reimbursement for academic programs aligned with TVA’s business and workforce development needs. In 2021, employees and contractors engaged in over 915,000 hours of training.

Leadership and Development and Succession Planning. TVA encourages personal and professional development and has strategic leadership development programs designed to prepare employees to step into leadership positions, accepting the additional responsibilities, expectations, and challenges faced by each level of leadership. TVA also has advanced leadership programs designed to further prepare leaders for executive level positions, which require an extensive interview and assessment process for selection. Through TVA’s talent review and succession planning program, 97% of director and executive level roles have at least one succession candidate identified.

Continuous focus on and support of leadership development is maintained through means such as talent discussions at least annually at every level of the organization, which includes attention to developing a diverse leadership pipeline. TVA has established goals for female and people of color representation in leadership and plans to update these goals to continuously improve this representation.

Engagement

TVA's work in this key area is focused on equipping leaders to champion engagement across the enterprise, leveraging and understanding the employee voice to make informed decisions that drive engagement, and enhancing policies and resources that support holistic employee well-being and promote engagement. Strong engagement levels impact all of TVA’s strategic priorities.

Employee Engagement Survey. TVA’s Employee Engagement Survey is a key tool for understanding and leveraging the employee voice. The survey is administered a minimum of twice annually to all employees and measures overall engagement and drivers of engagement. The survey results provide real-time insights and analytics and are compared to a normative database comprised of other relative external benchmarks to identify strengths and opportunities for improvement. Results from the surveys are shared with employees and used by TVA leadership and business units to improve and monitor progress against People Advantage objectives. Two scores are used as key People Advantage metrics: Engagement, which measures the sense of commitment and involvement, and Inclusion, which measures the sense of belonging at work. In 2021, TVA’s engagement score of 82% places it at top decile among over 750 companies from various industries.

Workplace Flexibility. As part of its People Advantage strategic priority, TVA strives to create a work environment that is welcoming, supportive, and responsive to the changing needs of the workforce. Recognizing the changing work environment, largely fostered by the COVID-19 pandemic, and responding to employee appreciation of flexibility in work location in 2021, TVA established a workplace flexibility initiative called “Reimagining How We Work.” The objective of the initiative is to promote workplace flexibility guided by safety, performance, inclusion, and engagement. Instead of returning to what was, TVA is embracing a more flexible future that puts people at the center of all it does to maximize its performance and mission.

Safety, Employee Health, and Well-being. Safety is one of TVA’s core values. TVA's safety program is based on the fundamentals of a safety management system, which includes management commitment, employee engagement, hazard recognition and control, worksite analysis, contractor safety management, training, review, and continuous improvement. Employee engagement is critical to the success of the program. TVA's vital safety behaviors are employee-driven and developed with the collaboration of represented employees, union leadership, and management. As a federal agency, TVA is also required to complete regulatory compliance inspections of its facilities on an annual basis.

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The COVID-19 pandemic has brought the importance of employee health, well-being, and retention into sharp focus. TVA has provided support for its employees throughout the pandemic to ensure the retention of valuable talent and to enhance well-being. This support includes establishing a mental health advocacy program, providing unlimited Employee Assistance Program sessions, enhancing paid leave, and providing tutoring resources, onsite vaccination clinics, and wellness incentives for vaccinations. In 2020, TVA established an Employee Relief Fund to support employees adversely affected by the COVID-19 pandemic and natural disasters and has continued those distributions in 2021 to assist employees.

TVA’s safety accomplishments in 2021 include:

•Consistent decline in recordable injuries and illnesses; and

•Industry top decile performance in recordable injury rate and top quartile performance in serious injury rate in 2021.

Partnerships with Unions. TVA has a long-standing policy of acknowledging and working with recognized representatives of its employees, and that policy is reflected in long-term agreements to recognize the unions (or their successors) that represent TVA employees. ~~Federal law prohibits~~TVA’s labor construct is complex and unique – different from private utility peers and with union influence that has the ability to reach national levels – primarily governed by the TVA Act. Neither the federal labor relations laws covering most private sector employers, nor those covering most federal agencies, apply to TVA.

TVA’s labor strategy is critical to the achievement of its strategic priorities as it prepares the workforce for the future. Its employees and contractors are represented by seven collective bargaining agreements and a total of 17 labor unions. This reflects 60% of TVA’s workforce, or approximately 6,000 employees. TVA’s partnerships with these unions go back more than 80 years and form the backbone of TVA and its ability to serve the people of the Tennessee Valley.

Recent accomplishments to strengthen the relationship between TVA and its labor unions include:

•Continued low-cost, reliable energy to residents across the Tennessee Valley:

–TVA and the Trades and Labor Council for Annual Employees announced a 10-year extension on their agreement in 2020.

–TVA and the North America’s Building Trades Unions announced a 10-year extension of their Project Labor Agreement in 2021, which provides stability for staffing of construction and maintenance projects throughout the Tennessee Valley and strengthens the relationship.

•Adoption of the Code of Excellence ("COE") — a union led partnership to promote the highest quality of work, best work practices, and the development of a highly skilled workforce – to drive business outcomes by applying the SPARQ principles of Safety, Professionalism, Accountability, Relationships, and Quality, including:

–During a year of unprecedented challenges, TVA set the industry benchmark for pandemic response and delivered strong operational excellence with one of the safest and most productive years on record, and TVA attributes this success in part to its strong union partnerships.

–Union-led labor management panel has partnered to reduce grievances (the number of grievances filed during 2017 was more than four times that of the grievances filed during 2021).

Awards

Awards and other recognition help TVA understand its strengths, identify opportunities for improvement, bolster employee pride, and better attract and retain diverse talent. Recognition in 2021 included:


•Forbes America's Best Large Employers 2021 - #2 in Utilities industry •Forbes Best Employers by State 2021 - Top 5 in Tennessee for third consecutive year •2021 Diversity Impact AwardsTM Top 10 Diversity Action Award			•Ranked in Top 100 - 2021 America's Most Loved Workplaces® (Newsweek in partnership with Best Practice Institute) •2021 Military Friendly® Employer Top 10 •Best in Class 401(k) Plan •One of the largest U.S. Contributor to Helmets to Hardhats Program

Key Metrics

TVA actively monitors internal metrics to remain aware of human capital trends and to ensure that it is making measurable progress on its People Advantage objectives. Through monitoring sources such as data and performance

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dashboards, one-on-one engagements between leaders and employees, and engagement surveys, TVA obtains information that helps it understand its performance and make adjustments, if needed.

Key measures of success in TVA’s People Advantage strategic priority are set forth below:


	Goal		Actual
Performance Measure	2022		2021		2020
People of color representation in leadership (%) (1)	10.0	%	9.6	%	9.0	%
Female representation in leadership (%) (1)	20.0	%	18.0	%	18.0	%
Diverse external hires (%) (2)	33.0	%	39.4	%	34.8	%
Regrettable losses (%) (3)	N/A		1.6	%	1.0	%
Voluntary attrition (%) (3)	1.5	%	1.5	%	1.9	%
Engagement (100 point scale) (4)	82		82		80
Inclusion (100 point scale) (5)	76		74		72
Recordable injuries (#) (6)	0		29		39

Notes

(1) Defined as first line supervisors and above.

(2) Defined as external hires who are female, persons of color, and persons with disabilities.

(3) Regrettable Loss is generally defined as voluntary terminations by employees with acceptable performance ratings. For 2022, this measure will be replaced by Voluntary Attrition, which is a more inclusive measure and accounts for all employees who leave the business voluntarily during a fiscal year.

(4) Based on score from ~~engaging in strikes against~~Employee Engagement Survey defined as degree to which employees invest their cognitive, emotional, and behavioral energies toward positive organizational outcomes.

(5) Based on score from Employee Engagement Survey defined as the degree to which employees sense they belong at work.

(6) Defined as the number of recordable injuries and illnesses per 100 full-time employees per year.

Workforce Demographics


Employee Demographics	2021	2020
Number of employees on September 30	10,192	9,989
Represented by collective bargaining unit	60% Represented, or approximately 6,000 employees	60% Represented, or approximately 6,000 employees
Trades and labor employees	3,261	3,287
Average tenure (years)	13	13
Average age	44.1	45.2

In addition to the employees above, TVA also had approximately 15,500 and 13,800 contractors on September 30, 2021 and 2020, respectively, providing both intermittent or full-time services. The majority of these contractors are managed by TVA suppliers that are providing services to TVA.


	All Employees		Leadership		New Hires
	2021	2020	2021	2020	2021	2020
Female	2,076	2,006	270	254	211	156
People of Color	1,146	1,098	143	133	122	83
Military, Veteran	1,822	1,804	318	322	107	78

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ITEM 1A. RISK FACTORS

The risk factors described below, as well as the other information included in this Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (the "Annual Report"), should be carefully considered. Risks and uncertainties described in these risk factors could cause future results to differ materially from historical results as well as from the results anticipated in forward-looking statements. Although the risk factors described below are the ones that TVA considers ~~significant,~~material, additional risk factors that are not presently known to TVA or that TVA presently does not consider ~~significant~~material may also impact TVA's business operations. See Forward Looking Information above for a description of some matters that could affect the below risks or generate new risks. Although the TVA Board has the authority to set TVA's own rates and may mitigate some risks by increasing rates, there may be instances in which TVA would be unable to partially or completely eliminate one or more of these risks through rate increases over a reasonable period of time or at all. Accordingly, theThe occurrence of any of the following could have a material adverse effect on TVA's cash flows, results of operations, ~~and~~or financial condition.

For ease of reference, the risk factors are presented in ~~four~~nine categories: (1) COVID-19 related risks; (2) cybersecurity risks; (3) regulatory, legislative, and legal risks; (4) operational risks; (5) risks ~~(2) operational risks, (3)~~related to the environment and catastrophic events; (6) financial, economic, and market ~~risks,~~risks; (7) human capital and ~~(4)~~management risks; (8) accounting and financial reporting risks; and (9) general business risks.

COVID-19 RELATED RISKS

The COVID-19 pandemic has adversely affected, and may continue to adversely affect, TVA's business, financial condition, and results of operations.

The COVID-19 pandemic has adversely affected, and may continue to adversely affect, TVA's business, financial condition, and results of operations. To date, the COVID-19 pandemic has resulted in reduced revenues primarily due to economic conditions surrounding COVID-19, including customers curtailing operations to reduce the spread of the outbreak as a result of quarantines, closures, or reduced operations of businesses or other institutions, among other things. TVA's revenues also decreased due to the deferral of revenues under programs offered by TVA to its LPCs to offset the impact of customers' inability to pay during the outbreak. TVA estimates base revenues were reduced by approximately $185 million for the year ended September 30, 2020. Based on current internal models, TVA estimates that the COVID-19 pandemic had little impact on TVA's sales volume for the year ended September 30, 2021. At this time, TVA does not anticipate sales volume will be materially impacted due to the COVID-19 pandemic beyond 2021. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Financial Results — Operating Revenues.

TVA could be further adversely affected by the impact of the COVID-19 pandemic on the economy and financial markets, including differences in the recovery of specific economic sectors or regions of the Tennessee Valley and continued volatility in interest rates, commodity prices, investment performance, and foreign currency exchange rates. An extended slowdown in the recovery of the United States’ economic growth, changes in the demand for commodities, or material changes in governmental policy could result in lower economic growth and lower demand for electricity in TVA’s key markets. In addition, contractual counterparties could be impaired in their ability to perform their obligations to TVA, which could result in more costly operation of TVA’s facilities. TVA has experienced fluctuations related to its pension plan assets and other investment portfolios during the years ended September 30, 2020 and 2021. The ultimate impact of the COVID-19 pandemic on the pension plan and other investments depends on factors beyond TVA's knowledge or control. A long-term recession could impact access to capital and have other long-term negative effects on TVA's business or results of operations.

In addition, TVA's results of operations could be impacted by, among other things, personnel who leave or forego employment to avoid vaccination requirements; social distancing to prevent illness from spreading within the workforce; remote work arrangements; travel restrictions; the availability of the workforce to perform essential functions; and the unavailability of fuel or critical parts, supplies, or services due to transportation restrictions or the shutdown, slowdown, or inability to meet contractual requirements of suppliers or other vendors in TVA's supply chain. In addition, the continued spread of the COVID-19 pandemic could adversely impact TVA's ability to develop, construct, and operate facilities; could delay or prevent the completion of projects; or could lead to impairments of TVA’s long-lived assets and accounts or loans receivable. Examples of potential impacts include delivery of force majeure notices from contractual counterparties, closure or reduced operation of global ports, or limitations on shipping key equipment as anticipated or at budgeted costs. These impacts could cause delays in construction projects or the performance of necessary maintenance to TVA’s generation or transmission facilities, which could impact the availability of TVA’s facilities for their intended operations.

To address specific aspects of the COVID-19 pandemic, TVA has implemented a company-wide pandemic plan, including limiting non-essential travel and mandatory telework for those who do not have to be physically present at a TVA facility or office building; implementing strong physical and cyber-security measures; actively monitoring generation, transmission, and distribution functions; and maintaining an increased cash reserve. However, it is possible that these measures will not be successful in mitigating the impacts of the pandemic. At this time, operations and delivery of energy to customers have not been materially impacted, but there is no guarantee that there will not be a material impact in the future.

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The extent to which the COVID-19 pandemic will impact TVA's business, financial condition, cash flows, and results of operations is uncertain and will depend on numerous evolving factors beyond TVA's control including, among other things, the duration and severity of the pandemic, actions taken to contain its spread and mitigate its effects, including vaccination programs, and the broader impact of the COVID-19 pandemic on the country, the region's economy, and global trade. However, TVA reasonably anticipates that any of a prolonged outbreak, impacts of variants of COVID-19, and resulting commercial or social restrictions could have a material adverse impact on its business, financial condition, and results of operations, and could require TVA to change how it conducts certain operations, takes power under certain agreements, or dispatches its own facilities.

See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives

and Challenges — COVID-19 Pandemic for an expanded discussion of the impact to TVA and related initiatives.

CYBERSECURITY RISKS

TVA’s facilities and information infrastructure may not operate as planned due to cyber threats to TVA’s assets

and operations.

TVA’s operations are heavily computerized and include assets such as information technology and networking systems.

As with all industries, the reliance on computerization and networking makes TVA a target for cyber attacks, and the risk

of such attacks may increase as individual devices and equipment become accessible via the internet. TVA has been

targeted by cyber attacks in the past and anticipates that it will be targeted in the future. These attacks may have been

carried out, or in the future could be carried out, by individuals, groups, or nation states. Although TVA has extensive

cyber safeguards and works with industry specialists and relevant governmental authorities to deter, stop, or mitigate

cyber attacks, it is possible that these measures might not prevent all attacks. Furthermore, there may be more attacks

in the future as technology becomes more prevalent in energy infrastructure. Cyber attacks could include viruses,

malicious or destructive code, phishing attacks, denial of service attacks, ransomware and other ransom-based attacks,

improper access by third parties, attacks on email systems, and ransom demands to not expose sensitive data,

gain operational control, or expose security vulnerabilities specific to TVA’s facilities, among various other security

breaches. In such a case, a cyber attack could compromise sensitive data; significantly disrupt operations; require

additional expenditures for cybersecurity; negatively affect TVA’s cash flows, results of operations, financial condition,

and reputation; and pose health and safety risks. Additionally, the theft, damage, or improper disclosure of sensitive

data may subject TVA to penalties and claims from third parties.

Cyber attacks on third parties could interfere with or harm TVA.

TVA relies on third parties for various services, including transferring funds to non-TVA entities and delivering

TVA’s products in the ordinary course of business. As with TVA, these third parties are heavily computerized and use

assets such as information technology and networking systems. If these third parties undergo cyber attacks, which

have occurred and may continue to occur, the services they provide TVA could be disrupted. This disruption could

interfere with TVA’s ability to perform its obligations to others, transfer funds, obtain fuel or critical parts, supplies, or

services, or make payments, which in turn could negatively affect TVA’s financial condition and reputation. Additionally,

the theft, damage, or improper disclosure of sensitive data held by these third parties may subject TVA to further harm.

See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiativesand Challenges — Safeguarding Assets — Cybersecurity for a discussion of recent cyber attacks on third parties.

REGULATORY, LEGISLATIVE, AND LEGAL RISKS

~~New~~Existing laws, regulations, ~~or administrative~~and orders ~~or congressional action or inaction,~~ may negatively affect TVA's cash flows, results of operations, and financial condition, as well as the way TVA conducts its business.

TVA is required to comply with comprehensive and complex laws, regulations, and orders. The costs of complying with these laws, regulations, and orders are substantial, and costs could be significantly more than TVA anticipates, especially with respect to environmental and nuclear compliance. In addition, TVA is required to obtain numerous permits and approvals from governmental agencies that regulate its business, and TVA may be unable to obtain or maintain all desired regulatory approvals. If there is a delay in obtaining desired regulatory approvals or if TVA fails to obtain or maintain any approvals or to comply with any law, regulation, or order, TVA may have to change how it operates certain assets, may be unable to operate certain assets, or may have to pay fines or penalties if it continues to operate the assets.

New laws, regulations, or administrative or executive orders, or congressional actions or inactions, may negatively affect TVA's cash flows, results of operations, and financial condition, as well as the way TVA conducts its business.

Because TVA is a corporate agency and instrumentality established by federal law, it may be affected by a variety of laws, regulations, and administrative or executive orders that do not affect other electric utilities. For example, federal

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legislation may expand or reduce TVA's activities, change its governance structure, require TVA to sell some or all of the assets that it operates, require TVA to take certain other operational or regulatory actions, reduce or eliminate the U.S.'s ownership of TVA, or even liquidate TVA. Additionally, Congress could act, or fail to take action, on various issues that may result in impacts to TVA, including but not limited to action or inaction related to the national debt ceiling or automatic spending cuts in government programs. Furthermore, administrative or executive orders could cause TVA to change the way it conducts its business. See Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive orders regarding climate change.

Although it is difficult to predict exactly how new laws, regulations, or administrative or executive orders or congressional action or inaction may impact TVA, some of the possible effects are described below.

TVA may lose its protected service territory.

TVA’s service area is defined primarily by provisions of law and long-term contracts. The fence limits the region in which TVA or LPCs which distribute TVA power may provide power. The anti-cherrypicking provision precludes FERC from ordering TVA to transmit power for others if that power would be consumed within the TVA service area. State service territory laws limit unregulated third parties’ ability to sell electricity to consumers. All current wholesale power contracts between TVA and LPCs are all requirements contracts; however, Flexibility Agreements available to LPCs that have executed long-term contracts with TVA allow LPCs to locally generate or purchase up to approximately five percent of average total hourly energy sales over 2015 - 2019 in order to meet their individual customers’ needs. In addition, other utilities may use their own transmission lines to serve customers within TVA’s service area, and third parties are able to avoid the restrictions on serving end-use customers by selling or leasing generating assets to a customer rather than selling electricity.

From time to time, there have been efforts to circumvent the protection of the anti-cherrypicking provision. For example, on January 11, 2021, four LPCs filed a complaint and petition with FERC asking FERC to order TVA to provide transmission and interconnection service to the LPCs or other suppliers that want to serve them, although one of the four LPCs subsequently withdrew from the complaint and petition. See Note 23 — Commitments and Contingencies — Legal Proceedings — Challenge to Anti-Cherrypicking Amendment. In addition, the protections afforded by the anti-cherrypicking provision could be affected by federal legislation at some time in the future. If FERC limited the application of the anti-cherrypicking provision or if federal legislation eliminated or limited the application of the anti-cherrypicking provision without corresponding legislative modifications to the territorial limitations imposed by the fence, TVA's ability to compete fairly for customers would be adversely affected. Because TVA’s ability to expand its customer base is constrained by the fence, reductions in demand have to be offset by such actions as reducing TVA’s internal costs or increasing rates. Any failure of such measures to fully offset the reduced demand for power may negatively affect TVA’s cash flows, results of operations, and financial condition.

TVA is involved in various legal and administrative proceedings whose outcomes may affect TVA's finances and operations.

TVA is involved in various legal and administrative proceedings and is likely to become involved in additional proceedings in the future in the ordinary course of business or as a result of, among other things, catastrophic events or environmental conditions at TVA property or areas where TVA has disposed of materials or property. The additional proceedings could involve, among other things, challenges to TVA’s CCR facilities, nuisance suits involving TVA’s coal-fired plants, challenges to the anti-cherrypicking provision, and challenges to TVA’s authority to set rates and enter into contracts. Although TVA cannot predict the outcome of the individual matters in which TVA is involved or will become involved, the resolution of these matters could require TVA to make expenditures in excess of established reserves and in amounts that could have a material adverse effect on TVA’s cash flows, results of operations, and financial condition. Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, change how it operates its fossil-fueled units, reduce emissions to a greater extent than TVA had planned, close existing CCR facilities sooner than planned, build new CCR facilities sooner than planned, build new CCR facilities that were not planned, cease operation of some coal-fired units, adjust its rates, or terminate or modify contracts. These events could also have a material adverse effect on TVA’s cash flows, results of operations, and financial condition. For a discussion of certain current material legal proceedings, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiativesand Challenges and Note 23 — Commitments and Contingencies — Legal Proceedings.

TVA may become subject to additional environmental regulation.

New environmental laws, regulations, or orders may become applicable to TVA or the facilities it operates, and existing environmental laws or regulations may be revised or reinterpreted in a way that adversely affects TVA, including substantially increasing TVA's cost of operations, prompting the early retirement of generation facilities, or requiring significant capital expenditures. Possible areas of future laws or regulations include, but are not limited to, GHGs, CCR, ELGs, water quality, renewable energy portfolio standards, and natural gas production and transmission. See Item 1, Business — Environmental Matters — Water Quality Control Developments for a discussion of the EPA's new effluent limitation guidelines, Item 1, Business — Environmental Matters — Cleanup of Solid and Hazardous Wastes — Coal Combustion Residuals for a discussion of recent revisions to the EPA's CCR rule, and Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive orders regarding

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climate change. Litigation may affect the timing and requirements of new regulatory proposals, and may indirectly affect TVA, even if TVA is not involved.

TVA could be divested by the federal government or be required to sell some or all of its assets.

From time to time, U.S. administrations have suggested that the federal government should either divest TVA or require TVA to sell some or all of its assets, including its transmission system. Either event could trigger change of control provisions in certain material contracts or covenants in TVA’s bond documents that concern the sale or disposal of a substantial portion of TVA’s power properties. TVA may, among other things, be required to pay off debt more quickly than anticipated and be unable to access credit facilities. Additionally, the loss of the transmission system could interfere with TVA’s operations and require TVA to contract for the transmission of electricity to customers. These factors could negatively affect TVA’s operations, change the way it conducts such operations, and increase costs.

TVA's ability to control or allocate funds could be restricted.

Other federal entities may attempt to restrict TVA's ability to access or control its funds that are on deposit in TVA's account in the U.S. Treasury. For example, should the U.S. Treasury approach its debt ceiling, the U.S. Treasury might, as part of an effort to control cash disbursements, attempt to require TVA to receive approval before disbursement of funds from TVA's U.S. Treasury account. Additionally, the OMB might, in the event that automatic spending cuts go into effect, attempt to require TVA to reduce its budget by a specified percentage (although the legal applicability of such a situation to TVA would depend upon the ~~wording of the~~specific legislation making the automatic spending cuts). Such attempts to restrict TVA's ability to control or allocate funds in those specific types of situations could adversely affect its cash flows, results of operations, and financial condition, its relationships with creditors, vendors, and counterparties, the way it conducts its business, and its reputation.

~~TVA may lose its protected service territory.~~

TVA's service area is defined primarily by provisions of law and long-term contracts. The fence limits the region in which TVA or LPCs which distribute TVA power may provide power. The anti-cherrypicking provision limits the ability of others to use the TVA transmission system for the purpose of serving customers within TVA's service area. State service territory laws limit unregulated third parties' ability to sell electricity to consumers. All current wholesale power contracts between TVA and LPCs are all requirements contracts. However, other utilities may use their own transmission lines to serve customers within TVA's service area, and third parties are able to avoid the restrictions on serving end-use customers by selling or leasing generating assets to a customer rather than selling electricity.

From time to time, there have been efforts to erode the protection of the anti-cherrypicking provision, and the protection of the anti-cherrypicking provision could be limited and perhaps eliminated by federal legislation at some time in the future. If federal legislation were to eliminate or reduce the coverage of the anti-cherrypicking provision but retain the fence, TVA could more easily lose customers that it could not replace within its specified service area. The loss of these customers could adversely affect TVA's cash flows, results of operations, and financial condition.

The TVA Board may lose its sole authority to set rates for electricity.

Under the TVA Act, the TVA Board has the sole authority to set the rates that TVA charges for electricity, and these rates are not subject to further ~~review.~~regulation. If the TVA Board loses this authority or if the rates or the ratemaking process become subject to external review, there could be material adverse effects on TVA including, but not limited to, being unable to set rates at a level sufficient to generate adequate revenues to service TVA's financial obligations, properly operate and maintain its assets, and provide for reinvestment in its power program and becoming subject to additional regulatory oversight that could impede its ability to adapt its business to changing circumstances.

TVA may lose responsibility for managing the Tennessee River system.

TVA's management of the Tennessee River system ~~is important to~~helps TVA effectively operate its power system. TVA's ability to integrate management of the Tennessee River system with power system operations increases power system reliability and reduces costs. Restrictions on how TVA manages the Tennessee River system could negatively affect its operations ~~change the way it conducts such operations,~~ or increase costs.

TVA may lose responsibility for managing real property currently under its control.

TVA's management of real property containing power generation and transmission structures as well as certain reservoir shorelines is important for navigation, flood control, and the effective operation of the power system. Restrictions on or the loss of the authority to manage these properties could negatively affect TVA's operations ~~change the way it conducts such operations,~~ or increase costs.

~~Existing laws, regulations, and orders may negatively affect TVA's cash flows, results of operations, and financial condition, as well as the way TVA conducts its business.~~

TVA is required to comply with comprehensive and complex laws, regulations, and orders. The costs of complying with these laws, regulations, and orders are expected to be substantial, and costs could be significantly more than TVA anticipates, especially in the environmental and nuclear areas. In addition, TVA is required to obtain numerous permits and approvals from governmental agencies that regulate its business, and TVA may be unable to obtain or maintain all required regulatory approvals. If there is a delay in obtaining required regulatory approvals or if TVA fails to obtain or maintain any approvals or to comply with any law, regulation, or order, TVA may have to change how it operates certain assets, may be unable to operate certain assets, or may have to pay fines or penalties if it continues to operate the assets.

~~TVA is involved in various legal and administrative proceedings whose outcomes may affect TVA's finances and operations.~~

TVA is involved in various legal and administrative proceedings, and is likely to become involved in additional proceedings in the future in the ordinary course of business, or as a result of, among other things, catastrophic events or environmental conditions at TVA property or areas where TVA has disposed of materials or property. The additional proceedings could involve, among other things, challenges to TVA's CCR facilities and nuisance suits involving TVA's coal-fired plants. Although TVA cannot predict the outcome of the individual matters in which TVA is involved or will become involved, the resolution of these matters could require TVA to make expenditures in excess of established reserves and in amounts that could have a material adverse effect on TVA's cash flows, results of operations, and financial condition. Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, change how it operates its coal-fired units, reduce emissions to a greater extent than TVA had planned, close existing CCR facilities sooner than planned, build new CCR facilities sooner than planned, build new CCR facilities that were not planned, or even cease operation of some coal-fired units. These events could also have a material adverse effect on TVA's cash flows, results of operations, and financial condition.

~~TVA is largely restricted to a defined service area.~~

TVA's ability to expand its customer base is constrained by its inability to pursue new customers outside its service area. Accordingly, reductions in demand have to be offset by such actions as reducing TVA's internal costs or increasing rates. Any failure of such measures to fully offset the reduced demand for power may negatively affect TVA's cash flows, results of operations, and financial condition.

TVA may become subject to additional NERC requirements.

TVA is subject to federal reliability standards that are set forth by NERC and approved by FERC. TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems. ~~Currently there are approximately 90 mandatory standards subject to enforcement containing approximately 1,300 requirements and sub-requirements that must be met.~~ Complying with these or additional requirements set forth by NERC may require significant capital expenditures and may negatively affect TVA's cash flows, results of operations, and financial condition.

TVA's governmental status may interfere in its ability to quickly respond to the needs of its current or potential customers or to act solely in the interest of its ratepayers.

As a quasi-governmental entity, TVA ~~could~~has certain legal requirements that prevent it from responding as quickly to potential changes in the market or requests from current or potential customers as might be ~~divested by the federal government~~desired or bein comparison to other utilities. For example, TVA is required to ~~sell some~~comply with the National Environmental Policy Act ("NEPA"), which requires environmental reviews to be performed in connection with certain projects. The delay in responding to requests could damage relationships with current customers, deter potential customers from moving into TVA's service territory, or ~~all~~damage TVA's reputation.

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In addition, TVA's nature as a quasi-governmental entity imposes additional pressures that most companies do not face, such as the requirement to support economic development; simultaneously manage a river system for commerce, recreation, and power generation; and promote recreational opportunities. TVA must balance these obligations with the requirement to provide power at the lowest feasible rates. If TVA does not adequately communicate how it fulfills its ~~assets.~~

~~From time~~various missions and the value it provides, its reputation may be harmed, which may result in political pressure to ~~time, presidential administrations have suggested that the federal government should either divest TVA~~change its nature or ~~require TVA to sell some or all of its assets, including its transmission system. Either event could trigger change of control provisions~~operations as well as in certain material contracts or covenants in TVA's bond documents that concern the sale or disposal of a substantial portion of TVA's power properties. TVA may, among other things, be required to pay off debt more quickly than anticipated and be unable to access credit facilities. Additionally, the loss of the transmission system could interfere with TVA's operations and require TVA to contract for the transmission of electricity to TVA customers. These factors could negatively affect TVA's operations, change the way it conducts such operations, and increase costs.public support.

OPERATIONAL RISKS

TVA may incur delays and additional costs in its major projects or may be unable to obtain necessary regulatory approval.

Among other projects, TVA is improving the reliability and resiliency of its transmission system, undertaking repairs at certain hydroelectric facilities and dams, and closing some coal-fired plants and their supporting infrastructure. These activities involve risks of overruns in the cost of labor and materials as well as risks of schedule delays, which may result from, among other things, changes in laws or regulations, lack of productivity, human error, supply chain challenges, and the failure to schedule activities properly. In addition, if TVA does not or cannot obtain the necessary regulatory approvals or licenses, is otherwise unable to complete the development or construction of a facility, decides to cancel construction of

a facility, incurs delays or cost overruns in connection with constructing a facility, or is required to change how it will conduct construction, repair, or closure activities, TVA's cash flows, financial condition, and results of operations could be negatively affected. Further, if projects are not completed according to specifications, TVA may suffer, among other things, delays in receiving licenses, reduced plant efficiency, reduced transmission system integrity and reliability, and higher operating costs.

TVA may not be able to operate one or more of its nuclear power units.

Should issues develop with TVA's nuclear power units that ~~TVA is~~are unable to ~~correct,~~be corrected, TVA might voluntarily shut down one or more units or be ordered to do so by the NRC. Returning the unit(s) ~~into~~to operation could be a lengthy and expensive process, or might not be possible depending on circumstances. In either case, TVA's cash flows, results of operations, financial condition, and reputation may be negatively affected.

Operating nuclear units subjects TVA to nuclear risks and may result in significant costs that adversely affect its cash flows, results of operations, and financial condition.

TVA has seven operating nuclear units. Risks associated with these units include the following:

Nuclear Risks. AHazards exist with the use of radioactive material in energy production, including management, handling, storage, and disposal. Further, a nuclear incident at one of TVA's facilities could have significant consequences including loss of life, damage to the environment, damage to or loss of the facility, and damage to non-TVA property. Although TVA carries certain types of nuclear insurance, the amount that TVA is required to pay in connection with a nuclear incident could significantly exceed the amount of coverage provided by insurance. Thelicensee of each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident of fault, up to a maximum of approximately $138 million per reactor, per incident. With TVA's seven reactors, the maximum total contingent obligation per incident is $963 million. This retrospective premium is payable at a maximum rate currently set at approximately $20 million per year, per incident, per reactor. Any such nuclear incident could also negatively affect TVA by, among other things, obligating TVA to pay retrospective insurance premiums, reducing the availability and affordability of insurance, increasing the costs of operating nuclear units, or leading to increased regulation or restriction on the construction, operation, and decommissioning of nuclear facilities. Moreover, federal legislation could impose revenue-raising measures on the nuclear industry to pay claims exceeding the limit for a single incident under the Price-Anderson Act. Further, the availability or price of insurance may be impacted by TVA's acts or omissions, such as a failure to properly maintain a facility, or events outside of TVA's control, such as an equipment manufacturer's inability to meet a guideline, specification, or requirement.

Decommissioning Costs. TVA maintains a Nuclear Decommissioning Trust ("NDT") for the purpose of providing funds to decommission its nuclear facilities. The NDT is invested in securities generally designed to achieve a return in line with overall equity and debt market performance. See Note 17 — Fair Value Measurements — Investment Funds for the NDT balance atSeptember 30, 2021. TVA might have to make unplanned contributions to the NDT if, among other things:

•The value of the investments in the NDT declines significantly or the investments fail to achieve the assumed real rate of return;

•The decommissioning funding requirements are changed by law or regulation;

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•The assumed real rate of return on plan assets, which is currently five percent, is lowered by the TVA Board or is overly optimistic;

•The actual costs of decommissioning are more than planned;

•Changes in technology and experience related to decommissioning cause decommissioning cost estimates to increase significantly;

•TVA is required to decommission a nuclear plant sooner than it anticipates; or

•The NRC guidelines for calculating the minimum amount of funds necessary for decommissioning activities are significantly changed.

If TVA makes additional contributions to the NDT, the contributions may negatively affect TVA's cash flows, results of operations, and financial condition.

Increased Regulation. The NRC has broad authority to adopt ~~requirements~~regulations related to the licensing, operating, and decommissioning of nuclear generation facilities and may adopt regulations as a result of events that occur at nuclear facilities in the U.S. or throughout the world, such as the events that occurred at Fukushima. These regulations can result in significant restrictions or requirements on TVA. For example, supplementary NRC rulemaking has been developed to mitigate beyond-design basis flooding

and seismic events. To comply with existing, new, or modified regulations, TVA may be required to make substantial capital expenditures at its nuclear plants or make substantial contributions to the NDT. In addition, if TVA fails to comply with requirements promulgated by the NRC, the NRC has the authority to impose fines, shut down units, or modify, suspend, or revoke TVA's operating licenses.

Waste Disposal. TVA's nuclear operations produce various types of nuclear waste materials, including spent fuel. TVA has been storing the spent fuel in accordance with NRC regulations in anticipation that a final storage site for all such waste will be developed and put in operation by the U.S. government. If no such site is forthcoming or if no alternative disposal or reuse plan is developed, then TVA might be required to arrange for the safe and permanent disposal of the spent fuel itself. Such a requirement would cause TVA to incur substantial expense, including substantial capital expenditures, and could cause TVA to change how it operates its nuclear plants.

Availability of Components. Nuclear facilities require specialized components and access to intellectual property for operation. As the number of reliable suppliers of such components and access to intellectual property is reduced, the availability of the components and access to the intellectual property will also likely decrease. If TVA is unable to secure either the original components, intellectual property, or replacements approved for use by the NRC, TVA might have to change how it conducts its operations. Further, limitations on global trade resulting from COVID-19 or limitations on global shipping could materially impact the availability or cost of desired equipment.

TVA's management and operation of CCR facilities exposes it to additional costs and risks.

TVA operates coal-fired units which produce CCR as byproducts of the power production process. The CCR is contained within dedicated facilities operated by TVA. TVA has closed some of these facilities in compliance with state and federal laws and is in the process of closing others. ~~Some facilities are intended to remain open during the life of the associated generation unit.~~ Many of these facilities were constructed prior to the requirement that such facilities be built with liners and thus do not contain ~~such~~ liners. TVA has been ordered by TDEC to undertake investigations at all CCR facilities in Tennessee. TVA has also been involved in litigation related to certain CCR facilities, and to resolve one such lawsuit, TVA agreed to remove or beneficially reuse some CCR material at ~~Gallatin.~~Gallatin Fossil Plant ("Gallatin"). TVA could be subject to similar litigation or orders in the future and could be required to restrict or stop the use of some or all CCR facilities or relocate CCR material to lined facilities. Further, TVA has decided to move all CCR material at Allen Fossil Plant rather than closing ~~them~~the CCR facilities in place as originally ~~planned.~~planned, and moving the CCR material subjects TVA to additional costs and risks. TVA may change its closure plans at other facilities depending on the particular facts of each situation and the completion of any required environmental investigations or ~~studies.~~studies and/or approval by appropriate state regulators.

TVA's facilities and operations may be damaged or interfered with by physical attacks, threats, or other interference.

TVA has an extensive generation and transmission system and supporting infrastructure that includes, among other things, TVA's generation facilities and transmission infrastructure such as substations, towers, and control centers. Some of TVA's hydroelectric facilities include navigation locks which are necessary for commerce along the Tennessee River system. TVA also operates flood control dams and supporting infrastructure. Because of TVA's status as a governmental corporation and TVA's role as ~~predominately~~predominantly the sole power provider for its service territory, TVA may be targeted by individuals, groups, or nation states for physical attacks or threats of such attacks. Although TVA's operations are protected by automated monitoring systems, TVA Police and Emergency Management, TVA employees,

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local law enforcement, or a combination thereof, it may not be possible to effectively deter or prevent attacks. Such attacks could pose health and safety risks, significantly disable or destroy TVA assets, interfere with TVA's operations, result in additional regulatory or security requirements, and negatively affect TVA's cash flows, results of operations, and financial condition.

~~TVA's facilities and information infrastructure may not operate as planned due to cyber threats to TVA's assets and operations.~~

TVA's operations are heavily computerized and include assets such as information technology and networking systems. As with all industries, the reliance on computerization and networking makes TVA a target for cyber attacks, and the risk of such attacks may increase as individual devices and equipment become accessible via the internet. TVA has been targeted by cyber attacks in the past and anticipates that it will be targeted in the future. These attacks may have been carried out, or in the future could be carried out, by individuals, groups, or nation states. Although TVA has extensive cyber safeguards and works with industry specialists and relevant governmental authorities to deter, stop, or mitigate cyber attacks, it is possible that these measures might not prevent all attacks. In such a case, a cyber attack could compromise sensitive data, significantly disrupt operations, require additional expenditures for cybersecurity, negatively affect TVA's cash flows, results of operations, financial condition, and reputation, and pose health and safety risks. Additionally, the theft, damage, or improper disclosure of sensitive data may subject TVA to penalties and claims from third parties.

~~Cyber attacks on third parties could interfere with or harm TVA.~~

TVA relies on third parties for various services, including transferring funds to non-TVA entities in the ordinary course of business. As with TVA, these third parties are heavily computerized and use assets such as information technology and networking systems. If these third parties undergo cyber attacks, the services they provide TVA could be disrupted. This disruption could interfere with TVA's abilities to perform its obligations to others or transfer funds or make payments, which in turn could negatively affect TVA's financial condition and reputation. Additionally, the theft, damage, or improper disclosure of sensitive data held by these third parties may subject TVA to further harm.

TVA's assets or their supporting infrastructure may not operate as planned.

Many of TVA's assets, including generation, transmission, navigation, and flood control assets, have been operating for several decades and have been in nearly constant service since they were completed. Additionally, certain of TVA's newer assets utilize advanced technology which could experience technical or operating issues. The failure of TVA's assets or supporting infrastructure, including information technology systems, to perform as planned may cause health, safety, or environmental problems and may even result in events such as the failure of a dam, the inability to maintain a reservoir at the normal or expected level, or an incident at a coal-fired, gas-fired, or nuclear plant or a CCR facility. If these assets or their supporting infrastructure fail to operate as planned, if necessary repairs or upgrades are delayed or cannot be completed as quickly as anticipated, or if necessary spare parts are unavailable, TVA, among other things:

•May have to invest a significant amount of resources to repair or replace the assets or the supporting infrastructure;

•May have to remediate collateral damage caused by a failure of the assets or the supporting infrastructure;

•May not be able to maintain the integrity or reliability of the transmission system at normal levels;

•May have to operate less economical sources of power;

•May have to purchase replacement power on the open market at prices greater than its generation costs;

•May be required to invest substantially to meet more stringent reliability standards;

•May be unable to maintain insurance on affected facilities, or be required to pay higher premiums for coverage, unless necessary repairs or upgrades are made;

•May be unable to operate the assets for a significant period of time; or

•May not be able to meet its contractual obligations to deliver power.

Any of these potential outcomes may negatively affect TVA's cash flows, results of operations, financial condition, and reputation.

TVA's safety programs may not prevent accidents that could, among other things, impact TVA's operations or financial condition.

TVA's safety program, no matter how well designed and operated, may not completely prevent accidents. In addition to the potential human cost of accidents, which could include injury to employees or members of the public, significant accidents could impact TVA's ability to carry out operations, cause it to shut down facilities, subject it to additional regulatory scrutiny, expose it to litigation, damage its reputation, interfere with its ability to attract or retain a skilled workforce, or harm its financial condition.

TVA's service reliability could be affected by problems at other utilities or at TVA facilities, or by the increase in intermittent sources of power.

TVA's transmission facilities are directly interconnected with the transmission facilities of neighboring utilities and are thus part of the larger interstate power transmission grid. Certain of TVA's generation and transmission assets are critical to maintaining reliability of the transmission system. Additionally, TVA uses certain assets that belong to third parties to transmit power and maintain reliability. Accordingly, problems at other utilities as well as at TVA's facilities may cause interruptions in TVA's service to TVA's customers, increase congestion on the transmission grid, or reduce service reliability. In addition, the increasing contribution of intermittent sources of power, such as wind and solar, may place additional strain on TVA's system as well as on surrounding systems. If TVA suffers a service interruption, increased congestion, or reduced service reliability, TVA's cash flows, results of operations, financial condition, and reputation may be negatively affected.

TVA's supplies of fuel, purchased power, or other critical items may be disrupted or obtained at a higher cost than planned.

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oxygen, or replacement parts that are critical to the operation of certain generation assets. TVA also purchases power from other power producers when the purchase of such power is appropriate due to economic opportunities or operational concerns. Disruption or price volatility in the acquisition or delivery of fuel, purchased power, contracted services, or other critical supplies, such as the natural gas price spikes that occurred in 2021, may result from a variety of physical and commercial events, political developments, international trade restrictions or tariffs, legal actions, cyber attacks, mine closures or reduced mine production, increases in fuel exports, or environmental regulations affecting TVA's suppliers as well as from transportation or transmission constraints. If one of TVA's suppliers fails to perform under the terms of its contract with TVA, TVA might have to purchase replacement fuel, power, or other critical supplies, perhaps at a significantly higher price than TVA is entitled to pay under the contract. In some circumstances, TVA may not be able to recover this difference from the supplier. In addition, any disruption ofTVA's supplies could require TVA to operate higher cost generation assets, thereby negatively affecting TVA's cash flows, results of operations, and financial condition. Moreover, if TVA is unable to acquire enough replacement fuel, power, or supplies, or does not have sufficient reserves to offset the loss, TVA may not be able to operate certain assets or provide enough power to meet demand, resulting in power curtailments, brownouts, or even blackouts.

TVA's determination of the appropriate mix of generation assets may change.

TVA has determined that its power generation assets should consist of a mix of nuclear, coal-fired, natural gas-fired, and renewable power sources, including hydroelectric. In making this determination, TVA took various factors into consideration, including the anticipated availability of its nuclear units, the availability of non-nuclear facilities, the forecasted cost of natural gas and coal, the forecasted demand for electricity, and environmental compliance including the expense of adding air pollution controls to its coal-fired units. If any of these assumptions materially change or are impacted by subsequent events, TVA's generation mix may not address its operational needs in the most efficient manner. For example, efforts to electrify the transportation and building sectors to reduce GHG emissions may result in higher electric demand and lower natural gas demand over time. In addition, achieving TVA's carbon reduction goals may require TVA to make significant capital investments, including investments in new technologies, and may require TVA to retire coal-fired and natural-gas fired generation facilities sooner than planned. Resolving situations where results vary from assumptions may require significant capital expenditures or additional power purchases, and TVA's cash flows, results of operations, financial condition, and reputation may be negatively affected.

RISKS RELATED TO THE ENVIRONMENT AND CATASTROPHIC EVENTS

Weather conditions may influence TVA's ability to supply power and its customers' demands for power.

Extreme temperatures may increase the demand for power and require TVA to purchase power at high prices to meet the demand from customers, while unusually mild weather may result in decreased demand for power and lead to reduced electricity sales. Also, in periods of below normal rainfall or drought, TVA's low-cost hydroelectric generation may be reduced, requiring TVA to purchase power or use more costly means of producing power. Additionally, periods of either high or low levels of rainfall may impede river traffic, impacting barge deliveries of critical items such as coal and equipment for power facilities. Furthermore, high river water temperatures in the summer may limit TVA's ability to use water from the Tennessee or Cumberland River systems for cooling at certain of TVA's generating facilities, thereby limiting its ability to operate these generating facilities. This situation would be aggravated during periods of reduced rainfall or drought. If changes in the climate make such shifts in weather more common or extreme or cause catastrophic events, such as droughts, floods, wildfires, and snow or ice storms, to occur more frequently in the Tennessee Valley region, TVA may be required to, among other things, change its generation mix or change how it conducts its operations, which could have a material adverse effect on TVA's cash flows, results of operations, and financial condition. Moreover, TVA's efforts to address the potential impacts of climate change may not be effective, as there are uncertainties with any new technology and operational development and deployment, and there are also potential financial, operational, and environmental impacts, including impacts to rates and reliability as well as siting and permitting challenges.

Events that affect the supply or quality of water in the Tennessee River system and Cumberland River system or elsewhere may interfere with TVA's ability to generate power.

An inadequate supply of water in the Tennessee River system and Cumberland River system could negatively impact TVA's cash flows, results of operations, and financial condition by reducing generation not only at TVA's hydroelectric plants but also at its coal-fired and nuclear plants, which depend on water from the river systems near which they are located for cooling and for use in boilers where water is converted into steam to drive turbines. Some of TVA's gas-fired facilities not located near a river require alternative sources of water, such as from wells or local utility companies. Further, the water must be of a particular quality for use in TVA's equipment. If the available water is not of sufficient quality for TVA's use, then TVA must either treat the water or obtain alternate sources. An inadequate supply of quality water could result, among other things, from periods of low rainfall or drought, the withdrawal of water from the river systems by governmental entities or others, incidents affecting bodies of water not managed by TVA, supply issues which affect water providers, or intrusive aquatic plants and animals such as eel grass, algae, and mussels that block cooling water intake pipes or otherwise interfere with the operation of TVA's generation facilities. While TVA manages

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the Tennessee River and a large portion of its tributary system to provide much of the water necessary for the operation of its power plants, the USACE operates and manages other bodies of water upon which some of TVA's facilities rely. Events at these bodies of water or their associated hydroelectric facilities may interfere with the flow of water and may result in TVA's having insufficient water quality to meet the needs of its generating plants. If TVA has insufficient water supply of the quality necessary to meet the needs of its plants, TVA may be required to treat the water, reduce generation at its affected facilities to levels compatible with the available supply of water, or take additional steps that change how TVA conducts its operations or cause TVA to incur additional expense.

Catastrophic events may negatively affect TVA's cash flows, results of operations, and financial condition.

TVA's cash flows, results of operations, and financial condition may be adversely affected, either directly or indirectly, by catastrophic events such as fires, earthquakes, explosions, solar events, electromagnetic pulses ("~~EMP"~~EMPs"), geomagnetic disturbances, droughts, floods, hurricanes, tornadoes, ~~wars~~polar vortexes, icing events, or other casualty events, orwars, national emergencies, terrorist activities, pandemics, or other similar destructive or disruptive events. These events, the frequency and severity of which are unpredictable, may, among other things, lead to legislative or regulatory changes that affect the construction, operation, and decommissioning of nuclear units and the storage of spent fuel; limit or disrupt TVA's ability to generate and transmit power; limit or disrupt TVA's ability to provide flood control and river management; reduce the demand for power; disrupt fuel or other supplies; require TVA to produce additional tritium; lead to an economic downturn; require TVA to make substantial capital investments for repairs, improvements, or modifications; and create instability in the financial markets. If public opposition to nuclear power makes operating nuclear plants less feasible as a result of any of these events, TVA may be forced to shut down its nuclear plants. This would make it substantially more difficult for TVA to obtain greater amounts of its power supply from low or zero carbon emitting resources and to replace its generation capacity when faced with retiring or idling certain coal-fired units. Additionally, some studies have predicted that climate change may cause catastrophic events, such as droughts and floods, to occur more frequently in the Tennessee Valley region, which could adversely impact TVA.

~~TVA's service reliability could be affected by problems at other utilities or at TVA facilities, or by the increase in intermittent sources of power.~~

~~TVA's supplies of fuel, purchased power, or other critical items may be disrupted or obtained at a higher cost than planned.~~

TVA purchases coal, uranium, natural gas, fuel oil, and electricity from a number of suppliers. Additionally, TVA contracts for conversion of uranium into nuclear fuel and purchases other items, such as anhydrous ammonia, liquid oxygen, or replacement parts that are critical to the operation of certain generation assets. TVA also purchases power from other power producers when the purchase of such power is appropriate due to economic opportunities or operational concerns. Disruption or price volatility in the acquisition or delivery of fuel, purchased power, contracted services, or other critical supplies may result from a variety of physical and commercial events, political developments, international trade restrictions or tariffs, legal actions, or environmental regulations affecting TVA's suppliers as well as from transportation or transmission constraints. If one of TVA's suppliers fails to perform under the terms of its contract with TVA, TVA might have to purchase replacement fuel, power, or other critical supplies, perhaps at a significantly higher price than TVA is entitled to pay under the contract. In some circumstances, TVA may not be able to recover this difference from the supplier. In addition, any disruption ofTVA's supplies could require TVA to operate higher cost generation assets, thereby negatively affecting TVA's cash flows, results of operations, and financial condition. Moreover, if TVA is unable to acquire enough replacement fuel, power, or supplies, or does not have sufficient reserves to offset the loss, TVA may not be able to operate certain assets or provide enough power to meet demand, resulting in power curtailments, brownouts, or even blackouts.

~~Events that affect the supply or quality of water in the Tennessee River system and Cumberland River system or elsewhere may interfere with TVA's ability to generate power.~~

An inadequate supply of water in the Tennessee River system and Cumberland River system could negatively impact TVA's cash flows, results of operations, and financial condition by reducing generation not only at TVA's hydroelectric plants but also at its coal-fired and nuclear plants, which depend on water from the river systems near which they are located for cooling and for use in boilers where water is converted into steam to drive turbines. Certain of TVA's gas-fired facilities not located near a river require alternative sources of water, such as from wells or local utility companies. Further, the water must be of a particular quality for use in TVA's equipment. If the available water is not of sufficient quality for TVA's use, then TVA must either treat the water or obtain alternate sources. An inadequate supply of quality water could result, among other things, from periods of low rainfall or drought, the withdrawal of water from the river systems by governmental entities or others, incidents affecting bodies of water not managed by TVA, or supply issues which affect water providers. While TVA manages the Tennessee River and a large portion of its tributary system to provide much of the water necessary for the operation of its power plants, the USACE operates and manages other bodies of water upon which some of TVA's facilities rely. Events at these bodies of water or their associated

hydroelectric facilities may interfere with the flow of water and may result in TVA's having insufficient water quality to meet the needs of its plants. If TVA has insufficient water supply of the quality necessary to meet the needs of its plants, TVA may be required to treat the water, reduce generation at its affected facilities to levels compatible with the available supply of water, or take additional steps that change how TVA conducts its operations or cause TVA to incur additional expense.

~~TVA's determination of the appropriate mix of generation assets may change.~~

FINANCIAL, ECONOMIC, AND MARKET RISKS

~~TVA's cost management efforts may not be successful.~~

TVA is continuing to improve operating efficiencies to offset any potential future reductions in power demand and maintain its rates, reputation, cash flows, results of operations, and financial condition. The failure to achieve or maintain cost reductions could adversely affect TVA's rates, reputation, cash flows, results of operations, and financial condition.

TVA may have to make significant contributions in the future to fund its qualified pension plan.

At September 30, ~~2019,~~2021, TVA's qualified pension plan had assets of approximately ~~$8.0~~$9.1 billion compared to liabilities of approximately $13.3 billion. The plan is mature with approximately ~~24,000~~23,000 retirees and beneficiaries receiving benefits of over $700 million per year. The costs of providing benefits depend upon a number of factors, including, but not limited to, provisions of the plan; changing experience and assumptions related to terminations, retirements, and mortality; rates of increase in compensation levels; rates of return on plan assets; discount rates used in determining future benefit obligations and required funding levels; optional forms of benefit payments selected; future government regulation; and levels of contributions made to the plan.

Although the plan is frozen to new participants, any of these factors or any number of these factors could keep at high levels, or even increase, the costs of providing benefits and require TVA to make contributions to the plan in amounts that significantly exceed TVA's planned contributions. Unfavorable financial market conditions, including conditions that may result from the COVID-19 pandemic, may result in lower expected rates of return on plan assets, loss in value of the investments, and lower discount rates used in determining future benefit obligations. These changes would negatively impact the funded status of the plan. Additional contributions to the plan and absorption of additional costs would negatively affect TVA's cash flows, results of operations, and financial condition.

TVA's debt ceiling could be made more restrictive. Additionally, approaching or reaching TVA's debt ceiling could limit TVA's ability to carry out its business.

The TVA Act provides that TVA can issue Bonds in an amount not to exceed $30.0 billion outstanding at any time. At September 30, ~~2019,~~2021, TVA had ~~$21.4~~$19.4 billion of Bonds outstanding (not including non-cash items of foreign currency exchange gain of ~~$191~~$58 million, unamortized debt issue costs of ~~$50~~$43 million, and net discount on sale of Bonds of ~~$81~~$72 million).

Approaching or reaching the debt ceiling may negatively affect TVA's business by limiting TVA's ability to access capital markets and increasing the amount of debt TVA must service. Also, federal legislation may lower TVA's debt ceiling or broaden the types of financial instruments that are covered by the ceiling. Either of these scenarios may also restrict TVA's ability to raise capital to acquire new power program assets or maintain existing ones, to carry out upgrades or improvements to existing assets or build new ones, to purchase power under long-term power purchase agreements, or to meet regulatory requirements. In addition, approaching or reaching the debt ceiling may lead to increased legislative or regulatory oversight of TVA's activities and could lead to negative rating actions by credit rating agencies.

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TVA may be unable to meet its current cash requirements if TVA's access to the debt markets is limited.

TVA uses cash provided by operations together with proceeds from power program financings and other financing arrangements to fund its current cash requirements. It is critical that TVA continues to have access to the debt markets in order to meet its cash requirements. The importance of having access to the debt markets is underscored by the fact

that TVA, unlike most utilities, relies almost entirely on debt capital since, as a governmental instrumentality, TVA cannot issue equity securities.

TVA, together with owners of TVA securities, may be impacted by downgrades of TVA's credit ratings.

Downgrades of TVA’s credit ratings may have material adverse effects on TVA’s cash flows, results of operations, and financial condition as well as on investors in TVA securities. Among other things, a downgrade could increase TVA’s interest expense by increasing the interest rates that TVA pays on new securities that it issues. Such an increase 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 also result in TVA’s having to post collateral under certain physical and financial contracts that contain ratings triggers. A downgrade below a contractual threshold may prevent TVA from borrowing under four credit facilities totaling $2.7 billion or posting letters of credit as collateral under these facilities. At September 30, 2021, there were $1.2 billion of letters of credit outstanding under these facilities. If TVA were no longer able to post letters of credit as collateral, TVA would likely have to post cash as collateral, which would negatively affect TVA’s liquidity. Further, a downgrade may lower the price of TVA securities in the secondary market, thereby negatively impacting investors who sell TVA securities after the downgrade and diminishing the attractiveness and marketability of TVA securities. The criteria used by credit rating agencies to assign ratings could also be changed at any time, which could result in changes to TVA's ratings.

TVA's credit ratings may be impacted by congressional actions or by a downgrade of the U.S.'s sovereign credit ratings.

TVA's current credit ratings are not based solely on its underlying business or financial condition but are based to a large extent on the legislation that defines TVA's business structure. Key characteristics of TVA's business defined by legislation include (1) the TVA Board's ratemaking ~~authority,~~authority; (2) the current competitive environment, which is defined by the fence and the anti-cherrypicking ~~provision,~~provision; and (3) TVA's status as a corporate agency and instrumentality of the U.S. If Congress takes any action that effectively alters any of these characteristics, TVA's credit ratings could be downgraded.

Although TVA Bonds are not obligations of the U.S., TVA, as a corporate agency and instrumentality of the U.S., may be impacted if the sovereign credit ratings of the U.S. are downgraded. Such a downgrade of the U.S.'s sovereign credit ratings could, among other things, result in a downgrade of TVA's credit rating. Additionally, the economy could be negatively impacted resulting in reduced demand for electricity, an increase in borrowing costs, and an increase in the cost of fuels, supplies, and other materials required for TVA's operations. Additionally, the criteria used by the credit rating agencies to assign ratings could be changed at any time, which could result in changes to TVA's ratings.

~~TVA, together with owners of TVA securities, may be impacted by downgrades of TVA's credit ratings.~~

Downgrades of TVA's credit ratings may have material adverse effects on TVA's cash flows, results of operations, and financial condition as well as on investors in TVA securities. Among other things, a downgrade could increase TVA's interest expense by increasing the interest rates that TVA pays on new securities that it issues. Such an increase 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 also result in TVA's having to post collateral under certain physical and financial contracts that contain ratings triggers. A downgrade below a contractual threshold may prevent TVA from borrowing under four credit facilities totaling $2.7 billion or posting letters of credit as collateral under these facilities. At September 30, 2019, there were $1.3 billion of letters of credit outstanding under these facilities. If TVA were no longer able to post letters of credit as collateral, TVA would likely have to post cash as collateral, which would negatively affect TVA's liquidity. Further, a downgrade may lower the price of TVA securities in the secondary market, thereby negatively impacting investors who sell TVA securities after the downgrade and diminishing the attractiveness and marketability of TVA securities. The criteria used by credit rating agencies to assign ratings could also be changed at any time, which could result in changes to TVA's ratings.

TVA's assumptions about the future may be inaccurate.

TVA uses certain assumptions in order to develop its plans for the future. Such assumptions include economic forecasts, anticipated energy and commodity prices, cost estimates, construction schedules, power demand forecasts, the appropriate generation mix to meet demand, and potential regulatory environments. Should these assumptions be inaccurate, or be superseded by subsequent events, TVA's plans may not be effective in achieving the intended results, which could negatively affect cash flows, results of operations, and financial condition, as well as TVA's ability to meet electricity demand and the way TVA conducts its business.

Demand for electricity may significantly decline or change, negatively affecting TVA's cash flows, results of operations, and financial condition.

Some of the factors that could reduce or change the demand for electricity include, but are not limited to, the following:

Economic ~~downturns~~Downturns or Recessions. Renewed economic downturns or a recession in TVA's service area or other parts of the U.S. could reduce overall demand for power and thus reduce TVA's power sales and cash flows, especially if TVA's industrial customers, which constitute a material portion of TVA's demand, reduce their operations and thus their consumption of power.

Loss of ~~customers~~Customers. TVA could lose customers, particularly LPCs, if customers choose another utility to meet some or all of their power needs where available, pursue self-generation to meet some or all of their power needs, or move their operations outside of TVA's service territory. ~~At September 30, 2019,~~As of November 12, 2021, TVA had wholesale power contracts with ~~154 LPCs.~~153 LPCs, and 74 LPCs had entered into Flexibility Agreements with TVA that allow the LPCs to locally generate or purchase up to approximately five percent of average total hourly energy sales over 2015 - 2019

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in order to meet their individual customers' needs. A significant portion of TVA's total operating revenues are concentrated in a small number of these LPCs. In May 2020, TVA's largest LPC which accounts for nine percent of total operating revenues, MLGW, published a draft Integrated Resource Plan to guide energy choices in the future, the outcome of which is uncertain. In addition, certain other LPCs are evaluating options for future energy choices. The loss of customers could have a material adverse effect on TVA's cash flows, results of operations, or financial condition, and could result in higher rates, especially because of the difficulty in replacing customers ~~on account of~~due to the fence. A significant loss of customers could also impact investor confidence, resulting in TVA paying higher rates on its securities.

Change in ~~demand~~Demand for ~~electricity generated~~Electricity Generated from ~~renewable sources.~~ Renewable Sources. TVA has been adapting its generation mix to account for the growing preference for electricity generated by renewable sources, such as solar or wind. If demand by customers for power that is largely or exclusively generated from renewable sources exceeds TVA's ability to produce such power, TVA might have to change how it operates and may incur additional expense in meeting this demand.

Increased ~~utilization~~Utilization of DER. As the amount of DER grows on the TVA system, the need for TVA's traditional generation resources may be reduced, and the ability of the system to reliably and economically operate in conjunction with these DER may become more challenging. If TVA is unable to compensate for the resulting decrease in demand for TVA electricity, TVA's cash flows, results of operations, and financial condition could be negatively impacted, resulting in higher rates and changes to TVA's operations.

Increased ~~energy efficiency~~Energy Efficiency and ~~conservation~~Conservation. Increasingly efficient use of energy as well as conservation efforts and DER have reduced the demand for ~~power.~~power supplied by TVA. Further reductions, if TVA is unable to compensate for them, could negatively affect TVA's cash flows, results of operations, and financial condition and could result in higher rates and changes to TVA's operations, especially if the reductions occur during an economic downturn or a period of slow economic growth.

Changes in technology could require TVA to change how it conducts its operations, affect relationships with customers, or impact its financial condition.

TVA's primary business is to sell power it produces, for the most part, from large facilities such as nuclear power plants, hydroelectric facilities, natural gas-fired facilities, and coal-fired units. TVA sells power to LPCs and directly served customers. Research and development activities are ongoing to improve existing and alternative technologies to produce or store electricity, including large-scale energy storage, gas or wind turbines, fuel cells, microturbines, solar cells, and distributed energy or storage resources. It is possible that advances in these or other alternative technologies could reduce the costs of such production methods to a level that will enable these technologies to compete effectively with traditional power plants such as TVA's. These technologies could be more appealing to customers and could lead them to bring pressure on TVA to modify the power contracts to allow customers to generate some of their own power requirements or purchase power from other suppliers. Other customers might also cease purchasing power from TVA altogether. To the extent that sales to such customers are reduced or eliminated, TVA's cash flows, results of operations, and financial condition could be negatively affected. TVA could also be required to modify how it operates its traditional plants or further modify its generation mix to reduce reliance on these facilities.

Additionally, demand could change in terms of amount or timing as devices and equipment become more connected to the internet and it becomes possible to adjust real-time consumption of power. Such increased control over power consumption could, among other things, affect how TVA operates its facilities or dispatches power, or require TVA to change its pricing structure or rates.

TVA is subject to a variety of market risks that may negatively affect TVA's cash flows, results of operations, and financial condition.

TVA is subject to a variety of market risks, including, but not limited to, commodity price risk, investment price risk, interest rate risk, counterparty credit and performance risk, and currency exchange rate risk.

Commodity Price Risk. TVA's rates may increase if prices of commodities critical to operations, including coal, uranium, natural gas, fuel oil, crude oil, construction materials, or emission allowances, increase.

Investment Price Risk. TVA is exposed to investment price risk in its NDT, Asset Retirement Trust ("ART"), Supplemental Executive Retirement Plan ("SERP"), Deferred Compensation Plan ("DCP"), and pension plan. If the value of the investments held in the NDT or the pension fund either decreases or fails to increase in accordance with assumed rates of return, TVA may be required to make substantial contributions to these funds. In addition, although TVA is not required to make contributions to the ART, it may choose to do so, particularly if TVA's estimates of its non-nuclear asset retirement obligation liabilities increase. TVA may also choose to make contributions to the SERP and DCP from time to time.

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Interest Rate Risk. Changes in interest rates may increase the amount of interest that TVA pays on new Bonds that it issues, decrease the return that TVA receives on short-term investments, decrease the value of the investments in the NDT, ART, pension fund, SERP, and DCP, increase the amount of collateral that TVA is required to post in connection with certain of its derivative transactions, and increase the losses on the mark-to-market valuation of certain derivative transactions into which TVA has entered.

Counterparty Credit and Performance Risk. TVA is exposed to the risk that its counterparties will not be able to perform their contractual obligations. If TVA's counterparties fail to perform their obligations, TVA's cash flows,

results of operations, and financial condition may be adversely affected. In addition, the failure of a counterparty to perform may make it difficult for TVA to perform its obligations, particularly if the counterparty is a supplier of electricity or fuel.

Currency Exchange Rate Risk. Over the next several years, TVA expects to spend a significant amount of capital on various projects. A portion of this amount may be spent on contracts that are denominated in one or more foreign currencies. Additionally, TVA's ~~three~~two issues of Bonds denominated in British pounds sterling are hedged by currency swap agreements. The value of the U.S. dollar compared with other currencies has fluctuated widely in recent years, including fluctuations in the U.S. dollar to British pound sterling exchange rate primarily driven by the "BREXIT" vote for the United Kingdom to leave the European Union. If not effectively managed, foreign currency exposure could negatively impact TVA's counterparty risk, cash flows, results of operations, and financial condition.

Changes in an interest rate benchmark may impact certain TVA swaps and other financial ~~arrangements~~.arrangements.

TVA has four "fixed for floating" interest rate swaps related to outstanding Bonds and receives periodic payments under these swaps based on the floating London Interbank Offered Rate ("LIBOR") benchmark rate. TVA ~~may also have additional~~has limited other contracts that could be impacted. Various parts of the LIBOR ismarket are expected to be substantially discontinued ~~after 2021.~~in the coming years. LIBOR rates will be phased out between the end of calendar year 2021 and June 2023. Various alternatives for LIBOR are being evaluated by market participants, with the Secured Overnight Financing Rate being the most widely-adopted alternative thus far. TVA may face risks related to the viability of an alternative benchmark over the remaining terms of its current contracts, or over the terms of any future contracts that rely on the benchmark rate.

TVA's ability to use derivatives to hedge certain risks may be limited.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and its implementing regulations, TVA is subject to recordkeeping, reporting, and reconciliation requirements related to its derivative transactions. In addition, depending on how regulatory agencies interpret and implement the provisions of this act, TVA's hedging costs may increase, and TVA may have to post additional collateral and margin in connection with its derivative transactions. These occurrences may, among other things, negatively affect TVA's cash flows and cause TVA to reduce or modify its hedging activities, which could increase the risks to which TVA is exposed.

The market for TVA Bonds might be limited.

Although many TVA Bonds are listed on stock exchanges, there can be no assurances that any market will develop or continue to exist for any Bonds. Additionally, no assurances can be made as to the ability of the holders to sell their Bonds or as to the price at which holders will be able to sell their Bonds. Future trading prices of Bonds will depend on many factors, including prevailing interest rates, the then-current ratings assigned to the Bonds, the amount of Bonds outstanding, the time remaining until the maturity of the Bonds, the redemption features of the Bonds, the market for similar securities, and the level, direction, and volatility of interest rates generally, as well as the liquidity of the markets for those securities.

If a particular series of Bonds is offered through underwriters, those underwriters may attempt to make a market in the Bonds. Dealers other than underwriters may also make a market in TVA Bonds. However, the underwriters and dealers are not obligated to make a market in any TVA Bonds and may terminate any market-making activities at any time without notice.

Further, certain investors use the environmental impact or sustainability of an industry as a criteria for deciding whether to invest in that industry. TVA's use of fossil fuels or nuclear power could lead such investors to not purchase TVA Bonds.

In addition, legal limitations may affect the ability of banks and others to invest in Bonds. For example, national banks may purchase TVA Bonds for their own accounts in an amount not to exceed 10 percent of unimpaired capital and surplus. Also, TVA Bonds are "obligations of a corporation which is an instrumentality of the United States" within the meaning of Section 7701(a)(19)(C)(ii) of the Internal Revenue Code for purposes of the 60 percent of assets limitation applicable to U.S. building and loan associations.

~~TVA may be unable to use regulatory accounting for some or all costs.~~

TVA uses regulatory accounting to defer certain costs. To qualify for regulatory accounting, costs must meet certain accounting criteria and be approved for regulatory accounting treatment by the TVA Board in its capacity as TVA's regulator. If costs do not meet, or cease to meet, these criteria, or if the TVA Board disallows the treatment or ceases to be TVA's sole regulator in such areas, TVA may not be able to defer those costs. Such an inability to defer costs would likely have a substantial impact on TVA's financial condition and resultsTable of operations and could impact the timing and amounts of TVA's rate recovery. For a discussion of regulatory accounting, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — ~~Critical Accounting Policies and Estimates~~.Contents

~~TVA's financial control system cannot guarantee that all control issues and instances of fraud or errors will be detected.~~

No financial control system, no matter how well designed and operated, can provide absolute assurance that the objectives of the control system are met, and no evaluation of financial controls can provide absolute assurance that all control issues and instances of fraud or errors can be detected. The design of any system of financial controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Payment of principal and interest on TVA securities is not guaranteed by the U.S.

Although TVA is a corporate agency and instrumentality of the U.S. government, TVA securities are not backed by the full faith and credit of the U.S. Principal and interest on TVA securities are payable solely from TVA's net power proceeds. Net power proceeds are the remainder of TVA's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties and payments to states and counties in lieu of taxes, but 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. If TVA were to experience extreme financial difficulty and were unable to make payments of principal or interest on its Bonds, the federal government would not be legally obligated to prevent TVA from defaulting on its obligations. An inability to pay some or all of the principal or interest owed on a TVA security would likely have a negative impact on TVA's financial condition, reputation, and relationship with the investment community, and could result in cross-defaults in other financial arrangements.

HUMAN CAPITAL AND MANAGEMENT RISKS

Failure to attract and retain an appropriately qualified workforce may negatively affect TVA's results of operations.

TVA's business depends on its ability to recruit and retain key executive officers as well as skilled professional and technical employees. The inability to attract and retain an appropriately qualified, diverse, and inclusive workforce could adversely affect TVA's ability to, among other things, operate and maintain generation and transmission facilities, complete large construction projects, and successfully implement its continuous improvement initiatives. If Congress reduces the salary of TVA's CEO or otherwise amends TVA's compensation philosophy, TVA's ability to attract and retain employees may be compromised.

Loss of a quorum of the TVA Board could limit TVA's ability to adapt to meet changing business conditions.

Under the TVA Act, a quorum of the TVA Board is five members. Becoming a member of the TVA Board requires confirmation by the U.S. Senate following appointment by the President. Further, the President may remove TVA Board members, and the TVA Board members may not continue in office indefinitely until a successor is appointed. As a result, a delay in the appointment or confirmation of directors, or the removal of directors by the President, can threaten the TVA Board's quorum. The TVA Board is responsible for, among other things, establishing the rates TVA charges for power as well as TVA's long-term objectives, policies, and plans. Accordingly, loss of a quorum for an extended period of time would impair TVA's ability to change rates and to modify these objectives, policies, and plans. Such an impairment would likely have a negative impact on TVA's ability to respond to significant changes in technology, the regulatory environment, or the industry overall and, in turn, negatively affect TVA's cash flows, results of operations, financial condition, and reputation.

Changes in the membership of the TVA Board and TVA senior management could impact how TVA operates.

The TVA Board is comprised of up to nine part-time members serving staggered, five-year terms. One to two Board members' terms typically expire each year. In addition, there is always the possibility that one or more members of TVA's senior management may retire or otherwise leave TVA. The individuals filling either the TVA Board or senior management positions may wish to change how TVA operates in whole or in part. If the changes are not successful or TVA is not able to adapt properly to such changes, TVA's financial condition, results of operations, reputation, and relationship with customers could be negatively affected.

ACCOUNTING AND FINANCIAL REPORTING RISKS

TVA may be unable to use regulatory accounting for some or all costs.

TVA uses regulatory accounting to defer certain costs. To qualify for regulatory accounting, costs must meet certain accounting criteria and be approved for regulatory accounting treatment by the TVA Board in its capacity as TVA's regulator. If costs do not meet, or cease to meet, these criteria, or if the TVA Board disallows the treatment or ceases to be TVA's sole regulator in such areas, TVA may not be able to defer those costs. Such an inability to defer costs would likely have a substantial impact on TVA's financial condition and results of operations and could impact the timing and amounts of TVA's rate recovery. For a discussion of regulatory accounting, see Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates.

TVA's financial control system cannot guarantee that all control issues and instances of fraud or errors will be detected.

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in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

GENERAL BUSINESS RISKS

TVA may not be able to implement its business strategy successfully.

TVA's financial condition and results of operations are largely dependent on the extent to which it can implement its business strategy successfully. TVA's strategy includes maintaining low rates, aligning operations and maintenance spending with revenues, ~~effectively maintaining low rates,~~ being responsible stewards, living ~~with~~within its means, meeting reliability expectations, and providing a balanced portfolio, in light of TVA's new strategic priorities: powerful partnerships, people advantage, operational excellence, igniting innovation, and ~~continuously improving, empowering, and engaging its employees.~~financial strength. This strategy is subject to business, economic, and competitive uncertainties and contingencies, many of which are beyond ~~TVA's~~TVA’s control. Such uncertainties include customer energy-efficiency programs that are designed to reduce energy demand; energy-efficiency efforts by customers not related to TVA’s energy-efficiency programs; increased customer use of DER, such as solar panels and other technologies, which have become more cost competitive, with decreasing costs expected in the future, as well as the use of energy storage technologies; and macroeconomic factors impacting economic growth or contraction within TVA’s service territory, which could affect energy demand. If TVA is unable to successfully implement its business strategy, ~~TVA's~~TVA’s financial condition and results of operations could be negatively affected. See Item 1, Business — Environmental Matters and Human Capital Management, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges, and Item 11, Executive Compensation — Compensation Discussion and Analysis for additional information regarding TVA's strategic objectives.

TVA's cost management efforts may not be successful.

TVA's organizational structure may not adequately support TVA's anticipated business needs or enable it to meet the needs of its current or potential customers.

TVA has been modifying its organizational structure to better adapt to the forecasted economic environment. If TVA's assumptions about either its forecasts or the proper internal structure of the company to meet the expected environment are inaccurate or if this structure does not adequately support TVA's needs, TVA could face operational or financial challenges that could adversely affect ~~TVA's~~its cash flows, results of operations, and financial condition as well as TVA's ability to attract or retain a skilled workforce and to meet the needs of its current or potential customers.

TVA may have difficulty in adapting its business model to changes in the utility industry and customer preferences.

The traditional business model for power production, selling power from centrally located plants, is facing pressure from a variety of sources, including the potential for self-generation by current or potential customers, new technologies such as energy storage, and increased energy efficiency. These pressures may reduce the demand for TVA power. If TVA does not or cannot adapt to this pressure by adequately changing its business model, TVA's financial condition and results of operations could be negatively affected.

~~TVA's quasi-governmental status may interfere in its ability to quickly respond to the needs of its current or potential customers or to act solely in the interest of its ratepayers.~~

As a quasi-governmental entity, TVA has certain legal requirements that prevent it from responding as quickly to potential changes in the market or requests from current or potential customers as might be desired or in comparison to other utilities. For example, TVA is required to comply with the National Environmental Policy Act ("NEPA"), which requires environmental reviews to be performed in connection with certain projects. The delay in responding to requests could damage relationships with current customers, deter potential customers from moving into TVA's service territory, or damage TVA's reputation.

these obligations with the requirement to provide power at the least system cost. If TVA does not adequately communicate how it fulfills its various missions and the value it provides, its reputation may be harmed, which may result in political pressure to change its nature or operations as well as in the loss of public support.

TVA's reputation may be negatively impacted.

As with any company, TVA's reputation is a vital element of its ability to effectively conduct its business. TVA's reputation could be harmed by a variety of factors, including the failure of a generating asset or supporting infrastructure, failure to effectively manage land and other natural resources entrusted to TVA, failure to meet its carbon reduction goals or other environmental, social, or governance goals, real or perceived violations of environmental regulations, including those related to climate change, real or perceived issues with TVA's safety culture or work environment, inability to meet its human capital management goals, significant delays in construction projects, cyber attacks or security vulnerabilities, acts or omissions of TVA management, acts or omissions of a contractor or other ~~third party~~third-party working with or for TVA, the perception of such acts or omissions, measures taken to offset reductions in demand, or a significant dispute with one of TVA's customers. Any deterioration in TVA's reputation may harm TVA's relationships with its customers and stakeholders, may increase ~~TVA's~~its cost of doing business, may interfere with its ability to attract and retain a skilled workforce, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way TVA conducts its business.

~~Failure to attract and retain an appropriately qualified workforce may negatively affect TVA's results of operations.~~

TVA's business depends on its ability to recruit and retain key executive officers as well as skilled professional and technical employees. The inability to attract and retain an appropriately qualified workforce could adversely affect TVA's ability to, among other things, operate and maintain generation and transmission facilities, complete large construction projects, and successfully implement its continuous improvement initiatives.

~~Loss of a quorum of the TVA Board could limit TVA's ability to adapt to meet changing business conditions.~~

Under the TVA Act, a quorum of the TVA Board is five members. Becoming a member of the TVA Board requires confirmation by the U.S. Senate following appointment by the President. Further, the TVA Board members may not continue in office indefinitely until a successor is appointed. As a result, a delay in the appointment or confirmation of directors can threaten the TVA Board's quorum. The TVA Board is responsible for, among other things, establishing the rates TVA charges for power as well as TVA's long-term objectives, policies, and plans. Accordingly, loss of a quorum for an extended period of time would impair TVA's ability to change rates and to modify these objectives, policies, and plans. Such an impairment would likely have a negative impact on TVA's ability to respond to significant changes in technology, the regulatory environment, or the industry overall and, in turn, negatively affect TVA's cash flows, results of operations, and financial condition.

~~Changes in the membership of the TVA Board and TVA senior management could impact how TVA operates.~~

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

TVA holds personal property in its own name but holds real property as agent for the U.S. TVA may acquire real property as an agent of the U.S. by negotiated purchase or by eminent domain.

Generating Properties

At September 30, ~~2019,~~2021, TVA-operated generating assets consisted of seven nuclear units, 2625 active coal-fired units, 86 simple-cycle units, one cogeneration unit, 14 combined-cycle power blocks, ~~113~~109 conventional hydroelectric units, four pumped-storage hydroelectric units, five diesel generator units, and 1413 solar ~~sites.~~installations. As of September 30, ~~2019, 16~~2021, eight of the simple-cycle combustion turbine units and four of the combined-cycle power blocks were leased to special purpose entities ("SPEs") and leased back to TVA under long-term leases. See Note 13 11 — Variable Interest Entities and Note 14 — Debt and Other Obligations — Lease/Leasebacks. In addition, TVA is leasing the three Caledonia combined-cycle power blocks under a long-term lease. For a discussion of these assets, see Item 1, Business —Power Supply and Load Management Resources.

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Net Capability

The following table summarizes TVA's summer net capability in MW at September 30, ~~2019:~~2021:


SUMMER NET CAPABILITY(1) At September 30, 2021
Source of Capability	Location	Number of Units	Summer Net Capability (MW)	Date First Unit Placed in Service (CY)	Date Last Unit Placed in Service (CY)
TVA-Operated Generating Facilities
Nuclear
Browns Ferry	Alabama	3	3,662	1974	1977
Sequoyah	Tennessee	2	2,292	1981	1982
Watts Bar	Tennessee	2	2,321	1996	2016
Total Nuclear		7	8,275
Coal-Fired
Bull Run	Tennessee	1	765	1967	1967
Cumberland	Tennessee	2	2,470	1973	1973
Gallatin	Tennessee	4	976	1956	1959
Kingston	Tennessee	9	1,298	1954	1955

Shawnee	Kentucky	9	1,071	1953	1955
Total Coal-Fired		25	6,580
Natural Gas and/or Oil-Fired(2)(3)
Simple-Cycle Combustion Turbine
Allen	Tennessee	20	456	1971	1972
Brownsville	Tennessee	4	456	1999	1999
Colbert	Alabama	8	392	1972	1972
Gallatin	Tennessee	8	612	1975	2000
Gleason	Tennessee	3	485	2000	2000
Johnsonville	Tennessee	19	1,088	1975	2000
Kemper	Mississippi	4	312	2002	2002
Lagoon Creek	Tennessee	12	932	2001	2002
Marshall County	Kentucky	8	592	2002	2002
Subtotal Simple-Cycle Combustion Turbine		86	5,325
Combined-Cycle Combustion Turbine
Ackerman(4)	Mississippi	1	713	2007	2007
Allen(5)	Tennessee	1	1,106	2018	2018
Caledonia(6)	Mississippi	3	765	2003	2003
John Sevier(7)	Tennessee	1	871	2012	2012
Lagoon Creek(8)	Tennessee	1	525	2010	2010
Magnolia	Mississippi	3	918	2003	2003
Paradise(9)	Kentucky	1	1,100	2017	2017
Southaven	Mississippi	3	780	2003	2003
Subtotal Combined-Cycle Combustion Turbine		14	6,778
Co-Generation
Johnsonville	Tennessee	1	80	1975	2000
Total Natural Gas and/or Oil-Fired		101	12,183
Hydroelectric
Conventional Plants	Alabama	36	1,176	1925	1962
	Georgia	2	35	1931	1956
	Kentucky	5	223	1944	1948
	North Carolina	6	492	1940	1956
	Tennessee(10)	60	1,824	1912	1972
Pumped-Storage(11)	Tennessee	4	1,635	1978	1979
Total Hydroelectric		113	5,385
Diesel Generator
Meridian	Mississippi	5	9	1998	1998
TVA Non-hydro Renewable Resources(12)			1
Total TVA-Operated Generating Facilities			32,433
Contract Renewable Resources(13)			326
Power Purchase and Other Agreements - Renewable(14)			2,009
Power Purchase and Other Agreements - Nonrenewable(14)			3,128
Total Summer Net Capability			37,896

SUMMER NET CAPABILITY⁽¹⁾
At September 30, 2019

Source of Capability

Location

Number
of Units
Summer Net Capability (MW) Date First Unit Placed in Service (CY) Date Last Unit Placed in Service (CY)
TVA-Operated Generating Facilities

Nuclear

Browns Ferry⁽²⁾
Alabama 3
3,309
1974
1977
Sequoyah Tennessee 2
2,292
1981
1982
Watts Bar Tennessee 2
2,321
1996
2016
Total Nuclear 7
7,922

Coal-Fired

Bull Run Tennessee 1
865
1967
1967
Cumberland Tennessee 2
2,470
1973
1973
Gallatin Tennessee 4
976
1956
1959
Kingston Tennessee 9
1,398
1954
1955
Paradise Kentucky 1
971
1963
1970
Shawnee Kentucky 9
1,206
1953
1955
Total Coal-Fired 26 7,886

Natural Gas and/or Oil-Fired⁽³⁾⁽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
642
1975
2000
Gleason Tennessee 3
500
2000
2000
Johnsonville Tennessee 19
1,189
1975
2000
Kemper Mississippi 4
348
2002
2002
Lagoon Creek Tennessee 12
1,048
2001
2002
Marshall County Kentucky 8
608
2002
2002
Subtotal Simple-Cycle Combustion Turbine 86
5,651

Combined-Cycle Combustion Turbine
Ackerman⁽⁵⁾
Mississippi 1
713
2007
2007
Allen⁽⁶⁾
Tennessee 1
1,106
2018
2018
Caledonia⁽⁷⁾
Mississippi 3
765
2003
2003
John Sevier⁽⁸⁾
Tennessee 1
871
2012
2012
Lagoon Creek⁽⁹⁾
Tennessee 1
525
2010
2010
Magnolia Mississippi 3
918
2003
2003
Paradise⁽¹⁰⁾
Kentucky 1
1,100
2017
2017
Southaven Mississippi 3
780
2003
2003
Subtotal Combined-Cycle Combustion Turbine 14
6,778

Co-Generation
Johnsonville Tennessee 1
80
1975
2000
Total Natural Gas and/or Oil-Fired 101
12,509

Hydroelectric

Conventional Plants Alabama 36
1,176
1925
1962
Georgia 2
35
1931
1956
Kentucky 5
223
1944
1948
North Carolina 6
492
1940
1956
Tennessee 64
1,858
1912
1972
Pumped-Storage⁽¹¹⁾
Tennessee 4
1,616
1978
1979
Total Hydroelectric 117
5,400

Diesel Generator

Meridian Mississippi 5
9
1998
1998
TVA Non-hydro Renewable Resources⁽¹²⁾

1

Total TVA-Operated Generating Facilities
33,727

Contract Renewable Resources⁽¹³⁾

389

Power Purchase and Other Agreements⁽¹⁴⁾

3,616

Total Summer Net Capability
37,732

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Notes

(1) Net capability is defined as the ability of an electric system, generating unit, or other system component to carry or generate power for a specified time period

and does not include operational limitations such as derates.

(2) ~~The summer net capability for Browns Ferry excludes the impact of the EPU project. The generating capability is expected to increase by an estimated~~

~~465 MW after sufficient run time to validate the new capacity.~~

~~(3)~~ See Generating Properties above for a discussion of TVA-operated natural gas and/or oil-fired facilities subject to leaseback and long-term lease arrangements.

~~(4) Peak~~(3) As of September 30, 2021, 326 MW of peak firing short-term capability of simple-cycle combustion turbine units ~~accounts~~was not operational and would require additional

investment for ~~326 MW of~~dependable use; therefore, this short-term ~~capability.~~capability is not presented in the table above.

~~(5)~~(4) Ackerman Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration).

~~(6)~~(5) Allen Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration).

~~(7)~~(6) Caledonia Combined Cycle Plant ("Caledonia CC") is currently a leased facility operated by TVA.

~~(8)~~(7) John Sevier Combined Cycle Facility ("John Sevier CCF") is a single steam cycle unit driven by three gas turbines (3x1 configuration).

~~(9)~~(8) Lagoon Creek Combined Cycle Facility is a single steam cycle unit driven by two gas turbines (2x1 configuration).

~~(10)~~(9) Paradise Combined Cycle Facility is a single steam cycle unit driven by three gas turbines (3x1 configuration).

~~(11)~~(10) Includes 86 MW of summer net capability associated with Hiwassee Hydro Unit 2. See Item 1, Business —Power Supply and Load Management Resources—~~Hiwassee Hydro Unit 2~~ Conventional Hydroelectric Dams.

(11) See Item 1, Business —Power Supply and Load Management Resources—Raccoon Mountain Pumped-Storage Plant for a discussion of ~~Hiwassee Hydro Unit 2.~~Raccoon Mountain Pumped-Storage Plant.

(12) TVA owns approximately 1 MW of solar ~~installations at 14 sites.~~capability among 13 solar installations.

(13) Contract Renewable Resources ~~include~~is capability from various historical renewable energy programs ~~established by TVA to encourage the development~~that consist of ~~solar, wind, biomass,~~PPAs primarily with individuals and ~~low-impact hydroelectric generation systems across the Tennessee Valley.~~small businesses.

(14) ~~Power Purchase and Other Agreements includes renewable resources.~~ See Item 1, Business — Power Supply and Load Management Resources — ~~Purchased~~ Power Purchase and Other Agreements for information on renewable and non-renewable energy power purchase contracts.

Transmission Properties

TVA's transmission system interconnects with systems of surrounding utilities and consisted primarily of the following assets at September 30, ~~2019:~~2021:

•Approximately 2,500 circuit miles of 500 kilovolt, ~~11,700~~11,900 circuit miles of 161 kilovolt, and 2,000 circuit miles of other voltage transmission ~~lines, and 3,500~~lines;

•4,048 miles of fiber optic lines;

~~510~~•522 transmission substations, power switchyards, and switching stations; and

~~1,314~~•1,325 customer connection points (customer, generation, and interconnection).

At September 30, ~~2019,~~2021, certain qualified technological equipment and ~~other~~ software ("QTE") related to TVA's transmission system were leased to private entities and leased back to TVA under long-term leases. See Note 13 14 — Debt and Other Obligations — Lease/LeasebacksandNote 23 — Commitments and Contingencies — Commitments— Leasebacks.

Natural Resource Stewardship Properties

TVA operates and maintains 49 dams and manages the following natural resource stewardship properties:

•Approximately 11,000 miles of reservoir shoreline;

•Approximately 293,000 acres of reservoir land;

•Approximately 650,000 surface acres of reservoir water; and

•Approximately 80100 public recreation areas throughout the Tennessee Valley, including campgrounds, day-use areas, and boat launching ramps.

Additionally, TVA manages over 170 agreements for commercial recreation (such as campgrounds and marinas).

As part of its stewardship responsibilities, TVA approval is required to be obtained before any obstruction affecting navigation, flood control, or public lands can be constructed in or along the Tennessee River and its tributaries. These public lands and waters managed by TVA provide both conservation and responsible recreation.

Buildings

TVA has a variety of buildings and structures located throughout its service area including generation and transmission facilities, corporate offices, customer service centers, power service centers, warehouses, visitor centers, and crew quarters. Two significant buildings are its Knoxville Office Complex ("KOC") and the Chattanooga Office Complex in Tennessee. ~~In 2013,~~

TVA ~~initiated a~~continues to study of its real ~~estate~~property portfolio ~~for~~as part of the ~~purpose of~~Strategic Real Estate Plan, which is aimed at reducing

cost, right-sizing the portfolio, and aligning ~~its~~ real estate holdings with TVA's strategic ~~direction over~~direction. In addition, as TVA continues to

implement mandatory telework for those who do not have to be physically present during the ~~next 10~~COVID-19 pandemic, it is also

assessing and reviewing the pandemic's long-term impacts to ~~20 years. As part of this effort, TVA completed a comprehensive assessment of its~~ real ~~estate holdings in the Knoxville region in 2016. For a discussion of these real estate holdings, see~~ ~~Disposal of Property— Knoxville Property~~ ~~below.~~estate.

Disposal of Property

TVA has broad authority to dispose of personal property but only limited authority to dispose of real property. TVA's primary, but not exclusive, authority to dispose of real property is briefly described below:

•TVA has authority to dispose of surplus real property at a public auction;

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•TVA may 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, providing real property for recreational use, and granting easements and rights-of-way upon which are located transmission or distribution lines;

•TVA can dispose of real property in connection with the construction of generating plants or other facilities under certain circumstances; and

•TVA has authority to grant easements for rights-of-way and other purposes.

The Basic Tennessee Valley Authority Power Bond Resolution adopted by the TVA Board on October 6, 1960, as amended on September 28, 1976, October 17, 1989, and March 25, 1992 (the "Basic Resolution") prohibits TVA from mortgaging any part of its power properties and from disposing of all or any substantial portion of these properties unless TVA provides for a continuance of the interest, principal, and sinking fund payments due and to become due on all outstanding Bonds, or for the retirement of such Bonds.

~~Bellefonte Nuclear Plant~~. On November 14, 2016, following a public auction, TVA entered into a contract to sell substantially all of the Bellefonte site to Nuclear Development, LLC, for $111 million. Nuclear Development, LLC, paid TVA $22 million on November 14, 2016, with the remaining $89 million due at closing. Nuclear Development, LLC, had up to two years from November 14, 2016, to close on the property, and TVA agreed to maintain the site until closing. Nuclear Development, LLC, requested and was granted an extension of the initial closing date to November 30, 2018. Nuclear Development, LLC, failed to obtain NRC approval of the transfer of the Bellefonte nuclear licenses. TVA determined that the Atomic Energy Act required that this approval be obtained before closing. TVA declined to provide a second extension of the purchase agreement. On November 30, 2018, Nuclear Development, LLC, filed suit against TVA in the United States District Court for the Northern District of Alabama. See Note 22 — ~~Commitments and Contingencies~~—~~Legal Proceedings~~ ~~for a discussion of the lawsuit filed by Nuclear Development, LLC.~~

Knoxville Property. In 2016, TVA completed a comprehensive assessment of its real estate holdings in the Knoxville, Tennessee region including the KOC and adjacent Summer Place Complex ("SPC"). As a result of this study and a subsequent ~~environmental assessment~~Environmental Assessment in 2017, TVA ~~is in the process of consolidating~~consolidated its Knoxville area employees into the West Tower of the KOC ~~or a~~and the Greenway Drive Transmission Service Center in 2020. Consolidation of the centralized field ~~office~~offices in Norris, ~~Tennessee. As part of this consolidation effort, TVA may convey~~Tennessee and additional consolidations from the ~~SPC and the majority of the East Tower of the KOC.~~Greenway Area Office are expected to be completed in early 2022.

ITEM 3. LEGAL PROCEEDINGS

From time to time, TVA is party to or otherwise involved in lawsuits, claims, proceedings, investigations, and other legal matters ("Legal Proceedings") that have arisen in the ordinary course of conducting ~~TVA's~~its activities, as a result of catastrophic events or otherwise. While the outcome of the Legal Proceedings to which TVA is a party cannot be predicted with certainty, any adverse outcome to a Legal Proceeding involving TVA may have a material adverse effect on TVA's ~~cash flows,~~financial condition, results of operations, and ~~financial condition.~~ cash flows.

For a discussion of Legal Proceedings involving TVA, see Note 2223 — Commitments and Contingencies —Legal Proceedings, which ~~discussions are~~discussion is incorporated by reference into this Item 3.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable.

~~ITEM 6. SELECTED FINANCIAL DATA~~

The following selected financial data for the years 2015 through 2019 should be read in conjunction with the audited financial statements and notes thereto (collectively, the "Consolidated Financial Statements") presented in Item 8, Financial Statements and Supplementary Data. Certain reclassifications have been made to the 2015, 2016, and 2017 financial statement presentations to conform to the 2018 and 2019 presentations.

Selected Financial Data⁽¹⁾⁽²⁾
For the years ended, or at, September 30
(dollars in millions)
2019 2018 2017 2016 2015
Sales (millions of kWh) 158,443
160,338
152,362
155,855
158,163

Peak load (MW)⁽³⁾
29,569
32,509
29,899
29,824
32,751

Operating revenues $ 11,318
$ 11,233
$ 10,739
$ 10,616
$ 11,003

Net income $ 1,417
$ 1,119
$ 685
$ 1,233
$ 1,111

Total assets $ 50,467
$ 48,667
$ 50,017
$ 50,494
$ 48,745

Financial obligations

Long-term debt, net⁽⁴⁾

Long-term power bonds, net $ 19,094
$ 20,157
$ 20,205
$ 20,901
$ 22,617
Long-term debt of variable interest entities, net 1,089
1,127
1,164
1,199
1,233
Long-term notes payable —
23
69
48
—
Total long-term debt, net $ 20,183
$ 21,307
$ 21,438
$ 22,148
$ 23,850

Current debt, net⁽⁴⁾

Short-term debt, net $ 922
$ 1,216
$ 1,998
$ 1,407
$ 1,034
Current maturities of power bonds 1,030
1,032
1,728
1,555
32
Current maturities of long-term debt of variable interest entities 39
38
36
35
33
Current maturities of notes payable 23
46
53
27
—
Total current debt, net $ 2,014
$ 2,332
$ 3,815
$ 3,024
$ 1,099

Total debt⁽⁴⁾
$ 22,197
$ 23,639
$ 25,253
$ 25,172
$ 24,949

Capital leases⁽⁵⁾
$ 187
$ 182
$ 187
$ 181
$ 105

Leaseback obligations $ 263
$ 301
$ 339
$ 467
$ 616

~~Notes~~

~~(1) See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations for a description of certain items in 2018, 2017, and 2016 affecting results in those years.~~

~~(2) See Item 1A, Risk Factors and Note 22~~— ~~Commitments and Contingencies~~ ~~for a discussion of risks and contingencies that could affect TVA's future financial results.~~

(3) TVA met an all-time summer peak demand of 33,482 megawatts ("MW") on August 16, 2007, at 102 degrees Fahrenheit and an all-time winter peak demand of 33,352 MW on January 24, 2014, at 7.3 degrees Fahrenheit.

~~(4) See Note 10 —~~ ~~Variable Interest Entitiesand Note 13~~— ~~Debt and Other Obligations~~ — ~~Debt Outstanding~~.

~~(5) Included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets.~~

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in millions except where noted)

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Tennessee Valley Authority ("TVA"), its financial condition, results of operations, and cash flows, and its present business environment. The MD&A is provided as a supplement to, and should be read in conjunction with, TVA's consolidated financial statements and the accompanying notes thereto contained in Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2021 (the "Annual Report"). See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in TVA's Annual Report on Form 10-K for the year ended September 30, 2020, filed with the Securities and Exchange Commission ("SEC") on November 16, 2020, for a discussion of variance drivers for the year ended September 30, 2020, as compared to the year ended September 30, 2019. The MD&A includes the following sections:

•Business and Mission — a general description of TVA's business, objectives, strategic priorities, and core capabilities;

•Executive Overview — a general overview of TVA's activities and results of operations for ~~2019;~~2021;

•Results of Operations — an analysis of TVA's consolidated results of operations for ~~the three years presented in its consolidated financial statements;~~2020 and 2021;

•Liquidity and Capital Resources — an analysis of cash flows, a description of aggregate contractual obligations, and an overview of financial position;

•Key Initiatives and Challenges — an overview of current and future initiatives and challenges facing TVA;

•Critical Accounting ~~Policies and~~ Estimates — a summary of ~~accounting policies~~significant estimates, judgements, and assumptions that ~~require critical judgments~~effect the amounts reported in the consolidated financial statements and ~~estimates;~~accompanying notes;

~~Fair Value Measurements — a description of TVA's investments and derivative instruments and valuation considerations;~~

•Legislative and Regulatory Matters — a summary of laws and regulations that may impact TVA; and

•Risk Management Activities — a description of TVA's risk governance and exposure to various market risks.

Business and Mission

Business

TVA operates the nation's largest public power system. At September 30, ~~2019,~~2021, TVA provided electricity to approximately ~~49 large industrial~~57 directly served customers, which include seven federal agency customers, and ~~154~~153 local power company customers ("LPCs") that serve ~~nearly~~approximately 10 million people in parts of seven southeastern states. TVA generates nearly all of its revenues from the sale of electricity, and in ~~2019~~2021 revenues from the sale of electricity totaled ~~$11.2~~$10.4 billion. As a wholly-owned agency and instrumentality of the United States ("U.S."), however, TVA differs from other electric utilities in a number of ways:

•TVA is a government corporation.

•The area in which TVA sells power is limited by the Tennessee Valley Authority Act of 1933, as amended (the "TVA Act") under a provision known as the "fence"; however, another provision of federal law known as the ~~"anti-cherrypicking" provision~~Anti-Cherrypicking Amendment ("ACPA") 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.

•The rates TVA charges for power are set solely by the TVA Board of Directors ~~(the "TVA~~("TVA Board") and are not set or reviewed by another entity, such as a public utility commission. 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.

•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, or other evidences of indebtedness (collectively, "Bonds") in an amount not to exceed $30.0 billion

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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.

TVA's Mission of Service



ENERGY	ENVIRONMENT	ECONOMIC DEVELOPMENT

•Energy — Delivering ~~affordable,~~ reliable, ~~power;~~low cost, clean energy;

•Environment — Caring for the region's natural resources; and

•Economic Development — Creating sustainable economic growth.

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While TVA's mission has not changed since it was established in 1933, the climate in which TVA operates continues to evolve. The business and economic environment has become more challenging due to economic conditions; tougher environmental standards; and the need to diversify its power supply and adapt to changing customer usage behaviors, new technologies, and emerging, non-traditional competition. To continue to deliver its mission of service while evolving for future success, TVA must realize ~~four~~five strategic ~~imperatives through people performance excellence:~~priorities, which are comprised of several strategic elements each:

~~Rates — Maintain low rates;~~

~~Stewardship — Be responsible stewards;~~

~~Debt — Live within its means;~~

~~Asset Portfolio — Meet reliability expectations and provide a balanced portfolio; and~~

~~People Performance Excellence — Continuously improve, empower, and engage employees.~~

Enhance our Role as a Community Leader and Trusted Partner

Create a Culture that Lives up to TVA's Values

Nation’s Top Nuclear Fleet by 2025

Advance Energy Transformation in the Valley through Innovation

Deliver Value to Enhance Prosperity in the Valley

Champion the Unique Value of the Valley Public Power Model

Accelerate the Impact of Inclusion with Diversity within TVA and the Communities TVA Serves

Evolve TVA's Reliable and Clean Energy Supply into the Energy System of the Future

Establish a Focused Innovation Framework and Mindset

Balance Commitments & Obligations

Region’s Top Choice for Business and Industry

Lead the Industry in Cost-effective Carbon Reduction

Develop Long-Term Business Model

Meet Resource and Environmental Stewardship Commitments

Build the Integrated and Reliable Grid of Tomorrow

Achieve Sustainable Debt Level

TVA's mission sets the stage for its strategic planning process that includes strategic objectives, initiatives, and scorecards for performance designed to provide clear direction for improving TVA's core business.

Linking the Mission to Performance

TVA has formulated key performance measures to support its strategic ~~imperatives.~~priorities. The intent of these measures is to align employees to TVA's mission by focusing its collective efforts on operational excellence, fiscal responsibility, ~~and~~ economic development, and environmental stewardship. The measures are designed to promote teamwork, encourage high performance behaviors, and motivate TVA employees to achieve goals aligned with TVA's mission and values. The ~~2019~~2021 corporate results compared with targets for these key measures are reflected in the chart ~~below.~~below, in addition to the 2022 approved corporate measures. See Item 11, Executive Compensation — Compensation Discussion and Analysis for information regarding how the measures are calculated.


2021 Corporate Measure	Weight	Actual			Threshold			Target			Stretch
TVA total spending ($ millions)	40%	$	5,144		$	5,488		$	5,333		$	5,178
Load not served (system minutes)	30%	3.2			4.6			3.9			3.4
Annualized nuclear unit capability factor (%)	15%	90.5		%	89.5		%	90.2		%	91.9		%
Combined cycle equivalent availability factor (%)	10%	85.3		%	75.9		%	80.9		%	85.8		%
Coal equivalent availability factor (%)	5%	71.6		%	59.0		%	64.0		%	82.1		%

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Corporate Measure Weight Actual Threshold Target Stretch
TVA total spending ($ millions) 40% $ 4,467
$ 4,862
$ 4,725
$ 4,589
Load not served (system minutes) 30% 3.7
4.8
4.0
3.6
Nuclear unit capability factor (UCF) (%) 15% 89.8 % 89.5 % 90.3 % 91.1 %
Combined cycle seasonal equivalent forced outage rate (%) 10% 7.5 % 3.3 % 2.0 % 1.5 %
Coal seasonal equivalent forced outage rate (%) 5% 12.7 % 13.6 % 12.1 % 10.8 %


2022 Corporate Measure	Weight	Threshold		Target		Stretch
TVA total spending ($ millions)	40%			Budget
Load not served (system minutes)	30%	4.5		3.9		3.2
Annualized nuclear online reliability loss factor (%)	15%	3.73	%	2.71	%	1.69	%
Combined cycle equivalent availability factor (%)	10%	77.6	%	82.6	%	84.9	%
Coal equivalent availability factor (%)	5%	58.2	%	63.2	%	69.6	%

Executive Overview

TVA's ~~net income~~operating revenues were $10.5 billion and $10.2 billion for the years ended September 30, ~~2019~~2021 and ~~2018,~~2020, respectively. Operating revenues increased for the year ended September 30, 2021 as compared to the prior year, primarily as a result of higher energy sales and an increase in fuel cost recovery revenue attributable to higher fuel rates. These increases were partially offset by lower effective rates primarily from the Pandemic Relief Credit that the TVA Board approved in 2020, which was ~~$1.4 billion~~in effect for 2021. The 2.5 percent monthly base rate credit, applied to service provided to TVA's local power company customers ("LPCs"), their large commercial and ~~$1.1 billion, respectively. As is often~~industrial customers, and TVA's directly served customers. For the ~~case~~year ended September 30, 2021, these credits accounted for ~~electric utilities, weather is~~$221 million of a ~~primary driver of~~decrease to operating revenue. In August 2021, the TVA Board approved a 2.5 percent monthly base rate credit, the Pandemic Recovery Credit, which will be effective for 2022. The credit, expected to approximate $220 million, will also apply to service provided to TVA's ~~sales. TVA's service territory experienced overall milder than normal weather during 2019, despite record-setting cold weather experienced during November 2018~~LPCs, their large commercial and ~~record-setting heat during September 2019. This overall milder weather drove lower energy sales. However, revenue from sales of electricity~~industrial customers, and TVA directly served customers.

Total operating expenses increased ~~$84~~$120 million for the year ended September 30, ~~2019,~~2021 as compared to the prior year, primarily ~~driven by the base rate adjustment that became effective October 1, 2018.~~

~~Fuel~~as a result of a $257 million increase in fuel and purchased power expense ~~decreased $119~~and a $170 million increase in operating and maintenance expense. The increase in fuel and purchased power expense was primarily due to higher effective fuel rates from higher natural gas prices and higher market rates of purchased power, as well as an increase in volume due to higher demand. The increase in Operating and maintenance expense was primarily due to an increase in contract labor driven by operational needs and work to support the company's strategic priorities and an increase in payroll and benefit costs driven by labor escalation for cost of living increases. These increases were partially offset by a $293 million decrease in Depreciation and amortization expense for the year ended September 30, ~~2019,~~2021 as compared to the same period of the prior year. This decrease was primarily ~~due~~driven by a decrease in depreciation expense as a result of the decision in 2019 to ~~lower energy~~accelerate the retirements of Bull Run Fossil Plant ("Bull Run") and Paradise Fossil Plant ("Paradise"). Paradise was fully depreciated in the second quarter of 2020.

TVA continues to closely monitor developments associated with the Coronavirus Disease 2019 ("COVID-19") pandemic, including impacts from variants. Based on current internal models, TVA estimates that the COVID-19 pandemic had little impact on TVA's sales ~~and an increase in hydroelectric generation. Operating and maintenance expense increased $492 million~~volume for the year ended September 30, ~~2019, as compared~~2021. At this time, TVA does not anticipate sales volume will be materially impacted due to the ~~prior year. This increase was primarily driven~~COVID-19 pandemic beyond 2021. In addition, operations and delivery of energy to customers have not been materially impacted by ~~accelerated recovery~~the COVID-19 pandemic at this time.

TVA issued its first green global power bond in September 2021. The $500 million bond has a 10-year maturity and carries a coupon interest rate of 1.500%, which set a record for the ~~regulatory asset~~lowest rate achieved by TVA on a 10-year financing since TVA began issuing debt in the public capital markets. TVA intends to use amounts equal to the proceeds from the sale for ~~environmental cleanup costs~~capital investments in renewable energy, energy efficiency, climate adaptation, and green innovation, including research and development expenditures related to the ~~Kingston ash spill in accordance with the TVA Board's ratemaking authority, an increase in project write-offs~~deployment of carbon-free and/or energy efficient solutions and materials and supplies inventory reserves and write-offs associated with the anticipated retirement of Paradise Fossil Plant ("Paradise") and Bull Run Fossil Plant ("Bull Run"), and increased outage expense driven by additional planned nuclear outage days.other innovations.

~~TVA continues to work with local power company customers ("LPCs") to provide flexibility to meet future changing needs of consumers.~~ During 2019, TVA implemented a change to the structure of its wholesale electric power rates through pricing that better aligns wholesale rates with the underlying cost to serve customers. In addition, the TVA Board approved a 20-year Partnership Agreement option that better aligns the length of LPC contracts with TVA's long-term commitments. The TVA Board also approved a joint project with LPCs to explore options for aggregated procurement of utility-scale and mid-scale renewable generation. Further, TVA issued a request for proposal in April 2019 for up to 200 MW of new renewable energy, in response to customer demand. With these proactive solutions, TVA expects to provide a stable foundation that provides the flexibility to embrace new trends and to continue delivering more innovative energy options.

TVA remains committed to planning its system in a way that ensures evolving resource portfolios remain reliable and provide the most value to all customers. TVA utilizes an Integrated Resource Plan ("IRP") to provide direction on how to best meet future electricity demand considering many views of the future to determine how TVA can continue to provide low-cost, reliable electricity, support environmental stewardship, and spur economic development in the Tennessee Valley over the next 20 years. The 2019 IRP was approved by the TVA Board at its August 2019 meeting.

Additionally, TVA has conducted economic analyses of its generating assets, considering load outlook, economic benefits and costs, performance, and environmental and social impacts. During its February 2019 meeting, the TVA Board approved the retirement of Paradise Unit 3 by December 2020 and Bull Run by December 2023. Subsequent to the Board approval, TVA determined Paradise would not be restarted after January 2020 due to the plant's material condition.

During 2019, TVA completed the final phase of the extended power uprate ("EPU") project at Browns Ferry Nuclear Plant ("Browns Ferry") and is currently finalizing testing and validation. The generating capacity is expected to increase by an estimated 465 MW after sufficient run time to validate the new capacity.

~~During 2019,~~2021, TVA continued to achieve 99.999 percent reliability in delivering energy to its customers. TVA's reliability, competitive rates, and economic development efforts continued to attract and encourage the expansion of business and industries in the Tennessee Valley, with over ~~$8.9~~$8.8 billion in investments and approximately ~~66,500~~80,900 jobs created or retained during the year.

Results of Operations

Sales of Electricity

Sales of electricity, which accounted for nearly all of TVA's operating revenues, in ~~2019~~, ~~2018~~,were 157,353 million and ~~2017~~.151,251 million kilowatt hours ("kWh") for 2021 and 2020, respectively. TVA sells power at wholesale rates to LPCs ~~who~~that then resell the power to their customers at retail rates. TVA also sells power to directly served customers, consisting primarily of federal agencies and customers with large or nonstandard loads. In addition, power exceeding ~~the TVA system's~~TVA's system needs is sold under exchange power arrangements with certain other power systems.

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The following chart compares TVA's sales of electricity by customer type for the years ended September 30, ~~2019~~, ~~2018~~,2021 and ~~2017~~:

2020:



			Sales of Electricity
For the years ended September 30
			(millions of kWh)

~~Notes~~

~~(1) Includes approximately 429 million kilowatt hours ("kWh")~~The following charts show a breakdown of ~~pre-commercial generation at Allen Combined Cycle Plant ("Allen CC"). See~~ TVA's energy load:

Note 1 ~~— Summary~~

Information included in the charts above was derived from energy usage of ~~Significant Accounting Policies — Pre-Commercial Plant Operations~~.directly served customers and customers served by LPCs during calendar year 2020, and these graphs will continue to be updated on a calendar year basis.

~~(2) Includes approximately 857 million kWh of pre-commercial generation at Watts Bar Nuclear Plant ("Watts Bar") Unit 2, Paradise Combined Cycle Plant ("Paradise CC"), and Allen CC. See Note 1~~ ~~— Summary of Significant Accounting Policies~~ — ~~Pre-Commercial Plant Operations~~.

Weather affects both the demand for TVA power and the price for that power. TVA uses degree days to measure the impact of weather on its power operations. Degree days measure the extent to which the TVA system 23-station average temperatures vary from 65 degrees Fahrenheit. During 2019, TVA transitioned degree day calculation methodologies, moving from the average temperatures of the five largest cities in TVA's service area to the average temperatures of 23 stations throughout TVA's service area. This transition provides TVA with increased geographic granularity throughout its service territory and improves modeling accuracy.


	Degree Days
	2021	Normal	Percent Variation		2020	Normal	Percent Variation		2021	2020	Percent Change
Heating Degree Days	3,216	3,360	(4.3)	%	3,056	3,369	(9.3)	%	3,216	3,056	5.2	%

Cooling Degree Days	1,611	1,686	(4.4)	%	1,688	1,691	(0.2)	%	1,611	1,688	(4.6)	%

~~2019 Compared to 2018~~

Degree Days
2019 Normal Percent Variation
2018⁽¹⁾

Normal⁽¹⁾
Percent Variation 2019
2018⁽¹⁾
Percent Change
Heating Degree Days 3,219
3,360
(4.2 )% 3,381
3,360
0.6 % 3,219
3,381
(4.8 )%

Cooling Degree Days 2,020
1,686
19.8 % 2,012
1,686
19.3 % 2,020
2,012
0.4 %

Total Degree Days 5,239
5,046
3.8 % 5,393
5,046
6.9 % 5,239
5,393
(2.9 )%

~~Note~~

(1) The prior period degree day information has been adjusted in order to incorporate a change in TVA's current calculation of this information. Every five years this calculation is updated in order to incorporate the current 15-year period of weather history. The most recent update, to incorporate weather history for CYs 2001-2015, occurred during the first quarter of 2019.

Sales of electricity ~~decreased~~increased approximately ~~one~~four percent for the year ended September 30, ~~2019,~~2021, as compared to the prior year primarily due to ~~decreased~~lower energy sales ~~volume~~ for ~~LPCs driven predominantly by a five percent decrease in heating degree days. During November 2018, TVA recorded its second highest peak power demand for~~2020, associated with the ~~month~~COVID-19 pandemic. Sales of November at 26,714 MW. During September 2019, TVA experienced nine days with demand over 28,000 MW, breaking TVA's record for the most days in September with demand over 28,000 MW. Further, during September 2019, TVA broke its September 30-day average peak load record with an average peak loadelectricity from

Table of 26,258 MW. Despite this record-setting weather, the TVA service territory experienced overall milder than normal weather in 2019 driven by overall lower than normal heating degree days. Partially offsetting the decreased sales volume for LPCs, sales to Contents

industries directly served increased ~~slightly, particularly in the polysilicon sector.~~

~~2018 Compared to 2017~~

Degree Days

2018⁽¹⁾

Normal⁽¹⁾
Percent Variation
2017⁽¹⁾

Normal⁽¹⁾
Percent Variation
2018⁽¹⁾

2017⁽¹⁾
Percent Change
Heating Degree Days 3,381
3,360
0.6 % 2,446
3,360
(27.2 )% 3,381
2,446
38.2 %

Cooling Degree Days 2,012
1,686
19.3 % 1,682
1,686
(0.2 )% 2,012
1,682
19.6 %

Total Degree Days 5,393
5,046
6.9 % 4,128
5,046
(18.2 )% 5,393
4,128
30.6 %

~~Note~~

~~(1) The prior period degree day information has been adjusted in order to incorporate~~as a ~~change in TVA's current calculation~~result of this information. Every five years this calculation is updated in order to incorporate the current 15-year period of weather history. The most recent update, to incorporate weather history for CYs 2001-2015, occurred during the first quarter of 2019.

~~Sales of electricity increased approximately five percent for the year ended September 30, 2018, as compared~~certain customers shifting maintenance outages from December 2020 to the ~~prior year, primarily~~summer of 2020, while businesses were closed due to increased sales volume for LPCs driven predominantly by a 31 percent increase in total degree days. Colder than normal weather during January 2018 led to TVA setting an all-time record for energy demand in a 24-hour period, as TVA delivered 706 million kWh of energy to the Tennessee Valley. Also in January 2018, TVA set three of its top-12 winter peak demand records. In addition, TVA's service territory experienced overall warmer than normal weather during the third and fourth quarters of 2018. Partially offsetting the increased sales volume for LPCs was a slight decrease in sales to industries directly served, particularly in the pulp and paper and polysilicon sectors.COVID-19 pandemic.

Financial Results

The following table compares operating results for ~~2019, 2018,~~2021 and ~~2017:~~2020:


Summary Consolidated Statements of Operations (in millions)
	2021		2020		Change		Percent Change
Operating revenues	$	10,503	$	10,249	$	254	2.5	%
Operating expenses	7,658		7,538		120		1.6	%
Operating income	2,845		2,711		134		4.9	%
Other income (expense), net	13		36		(23)		(63.9)	%
Other net periodic benefit cost	258		253		5		2.0	%
Interest expense	1,088		1,142		(54)		(4.7)	%
Net income	$	1,512	$	1,352	$	160	11.8	%

Summary Consolidated Statements of Operations
2019 2018 2017
Operating revenues $ 11,318
$ 11,233
$ 10,739
Operating expenses⁽¹⁾
8,507
8,665
8,006
Operating income 2,811
2,568
2,733
Other income, net 62
50
56
Other net periodic benefit cost⁽²⁾
258
256
758
Interest expense, net 1,198
1,243
1,346
Net income $ 1,417
$ 1,119
$ 685

~~Note~~

(1) For the year ended September 30, 2019, TVA recorded $566 million of accelerated depreciation and $170 million of write-offs related to the anticipated retirements of Paradise and Bull Run. See Note 6 ~~— Plant Closures. For the years ended September 30, 2019 and 2018, TVA recorded $266 million and $857 million of accelerated amortization of certain regulatory assets, respectively. See Note 8~~ ~~— Regulatory Assets and Liabilities~~.

~~(2) For the year ended September 30, 2017, TVA made a one-time additional discretionary $500 million contribution to TVA's pension plan.~~

Operating Revenues. Operating revenues for the years ended September 30, ~~2019, 2018,~~2021 and ~~2017 consisted~~2020, were $10.5 billion and $10.2 billion, respectively. The following chart compares TVA's operating revenues for the periods indicated:

TVA's two largest LPCs — Memphis Light, Gas and Water Division ("MLGW") and Nashville Electric Service ("NES") — have contracts with a five-year and a 20-year termination notice period, respectively. Sales to MLGW and NES accounted for nine percent and eight percent, respectively, of TVA's total operating revenues during both the years ended September 30, 2021 and 2020. Certain LPCs, including MLGW, are evaluating options for future energy choices. In addition, in January 2021, four LPCs filed a complaint and petition with the Federal Energy Regulatory Commission ("FERC") asking FERC to order TVA to provide transmission and interconnection service to the LPCs or other suppliers that want to serve them. In August 2021, one of the ~~following:~~



	~~Operating Revenues~~
~~For the years ended September 30~~

~~Notes~~

~~(1) Excludes a contra-revenue amount~~LPCs notified FERC of ~~approximately $11 million representing revenue capitalized during pre-commercial operations at Allen CC.~~its withdrawal from the complaint and petition. The remaining three LPCs accounted for three percent of TVA's total operating revenues for the year ended September 30, 2021. See Note 1 23 — ~~Pre-Commercial Plant Operations.~~Commitments and Contingencies — Legal Proceedings — Challenge to Anti-Cherrypicking Amendment for updates to this legal proceeding.

~~(2) Excludes a contra-revenue amount of approximately $22 million representing revenue capitalized during pre-commercial operations at Watts Bar Unit 2, Paradise CC, and Allen CC. See Note 1 —~~ ~~Pre-Commercial Plant Operations.~~

TVA's ~~current~~ rate structure ~~provides~~uses pricing signals ~~intended~~ to ~~signal~~indicate seasons and hours of higher cost ~~periods~~ to serve its customers and to capture a portion of TVA's fixed costs in fixed charges. The structure includes three base revenue components: time of use demand charges, time of use energy charges, and a grid access charge ("GAC"). The demand charges are based upon the customer's peak monthly usage and increase as the peak increases. The energy charges are based on time differentiated kWh used by the customer. Both of these components can be significantly impacted by weather. The GAC ~~which was implemented in October 2018,~~ captures a portion of fixed costs and ~~will be~~is offset by a corresponding reduction to the energy rates. The GAC ~~will~~ also ~~reduce~~reduces the impact of weather variability to the overall rate structure. Recognizing the need for flexibility, all LPCs were presented with the option to implement the GAC in October 2018 or defer the implementation until October 2019. Seventy-nine LPCs elected to implement in October 2018, while the remaining 75 implemented the wholesale changes in October 2019.

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~~Additionally, at its August~~ In 2019, ~~meeting,~~ the TVA Board approved a ~~20-year~~ Partnership Agreement option that better aligns the length of LPC power contracts with TVA's long-term commitments. Under the partnership arrangement, the LPC power contracts automatically renew each year and have a 20-year termination notice. The partnership arrangements can be terminated under certain circumstances, including TVA's failure to limit rate increases as provided for in the agreements going forward. Participating LPCs ~~will~~ receive benefits including a 3.1 percent wholesale bill credit in exchange for their long-term commitment, which enables TVA to recover its long-term financial commitments over a commensurate period. As of ~~September 30, 2019, 131~~November 12, 2021, 145 LPCs had signed the 20-year Partnership Agreement with TVA.

In August 2020, the TVA Board approved a Pandemic Relief Credit that was effective for 2021. The 2.5 percent monthly base rate credit, which ~~represents 56~~totaled $221 million for 2021, applied to service provided to TVA's LPCs, their large commercial and industrial customers, and TVA directly served customers through September 2021. In August 2021, the TVA Board approved a 2.5 percent monthly base rate credit, the Pandemic Recovery Credit, which will be effective for 2022. The credit, expected to approximate $220 million, will also apply to service provided to TVA's LPCs, their large commercial and industrial customers, and TVA directly served customers. In November 2021, the TVA Board approved a 1.5 percent monthly base rate credit, which is an extension of ~~total operating revenues~~the Pandemic Recovery Credit, to be effective for 2023. The 2023 credit is expected to approximate $133 million, and it will be administered in ~~2019.~~a manner similar to the Pandemic Recovery Credit.

In addition to base revenues, the rate structure ~~also~~ includes a separate fuel rate that includes the costs of natural gas, fuel oil, purchased power, coal, emission allowances, nuclear fuel, and other fuel-related commodities; realized gains and losses on derivatives purchased to hedge the costs of such commodities; and payments to states and counties in lieu of taxes ("tax equivalents") associated with the fuel cost adjustments. See Item 1, Business —Rates—Rate Methodology.

The changes in revenue components are summarized below:


Changes in Revenue Components For the years ended September 30 (in millions)
	2021		2020		Change
Base revenue
Energy revenue	$	4,719	$	4,546	$	173
Demand revenue	3,478		3,426		52
Grid access charge	596		597		(1)
Long-term partnership credits for LPCs	(189)		(163)		(26)
Pandemic relief credits	(221)		—		(221)
Other charges and credits(1)	(631)		(616)		(15)
Total base revenue	7,752		7,790		(38)
Fuel cost recovery	2,601		2,310		291
Off-system sales	4		4		—
Revenue from sales of electricity	10,357		10,104		253
Other revenue	146		145		1
Total operating revenues	$	10,503	$	10,249	$	254

2019 Variance 2019 vs 2018 2018 Variance 2018 vs 2017 2017
Base revenue

Energy revenue 5,128
(206 ) 5,334
⁽¹⁾
448
4,886
⁽²⁾
Demand revenue 3,609
154
3,455
195
3,260

Grid access charge 257
257
—
—
—

Other charges and credits⁽³⁾
(638 ) 22
(660 ) (13 ) (647 )
Total base revenue 8,356
227
8,129
630
7,499

Fuel cost recovery 2,799
(140 ) 2,939
(142 ) 3,081

Off-system sales 4
(3 ) 7
1
6

Revenue from sales of electricity 11,159
84
11,075
489
10,586

Other revenue 159
1
158
5
153

Total operating revenues $ 11,318
$ 85
$ 11,233
$ 494
$ 10,739

Note

~~Notes~~

(1) ~~Includes the impact of revenue capitalized during pre-commercial operations of approximately $11 million for the year ended September 30, 2018, at Allen CC. See Note 1~~ ~~— Summary of Significant Accounting Policies —Pre-Commercial Plant Operations.~~

(2) Includes the impact of revenue capitalized during pre-commercial operations of approximately $22 million for the year ended September 30, 2017, at Watts Bar Unit 2, Paradise CC, and Allen CC. See Note 1 — ~~Summary of Significant Accounting Policies —Pre-Commercial Plant Operations.~~

~~(3)~~ Includes economic development credits to promote growth in the Tennessee Valley, hydro preference credits for residential customers of LPCs, ~~interruptible~~and demand response credits allowing TVA to reduce industrial customer usage in periods of peak demand to balance system ~~demand, and long-term partnership agreement credits for LPC's that have committed to the 20-year contract with TVA.~~demand. See Note 1718 — ~~Revenue~~.Revenue.

~~2019 Compared to 2018~~

Operating revenues increased ~~$85~~$254 million for the year ended September 30, ~~2019,~~2021, as compared to the prior year, primarily due to a ~~$227~~$291 million increase in fuel cost recovery revenue, and partially offset by a $38 million decrease in base revenue. The ~~$227~~$291 million increase in fuel cost recovery revenue was driven by a $198 million increase attributable to higher fuel rates and a $93 million increase attributable to higher energy sales during 2021. Higher fuel rates resulted from an increase in natural gas and coal market prices in 2021. The $38 million decrease in base revenue was driven by a decrease of $352 million attributable to lower effective rates and partially offset by an increase of ~~$318~~$314 million attributable to higher sales volume. Lower effective rates ~~resulting~~resulted primarily from the ~~base rate adjustment that became~~Pandemic Relief Credit, which was effective ~~October 1, 2018, partially offset by a $103 million decrease attributable to lower sales volume. During November 2018, TVA recorded its second highest peak power demand~~ for the month of November at 26,714 MW. During September 2019, TVA experienced nine days with demand over 28,000 MW, breaking TVA's record for the most days in September with demand over 28,000 MW. TVA also broke its September 30-day average peak load record with an average peak load of 26,258 MW. Despite this record-setting weather, the TVA service territory experienced overall milder than normal weather in 2019 driven by overall lower than normal heating degree days. Partially offsetting these increases was a $140 million decrease in fuel cost recovery revenues, driven by a $104 million decrease attributable to lower fuel rates and a $35 million decrease attributable to lower energy sales. The lower fuel rates experienced were primarily driven by lower market prices for natural gas and increased hydroelectric generation.

~~2018 Compared to 2017~~

~~Operating revenues increased $494~~2021, totaling $221 million for the year ended September 30, ~~2018, as compared to the prior year,~~2021. Higher sales volume was primarily due to ~~a $630 million increase~~lower energy sales in ~~base revenue. The $630 million increase in base revenue was driven by an increase of $460 million resulting from higher sales volume during~~2020, associated with the ~~year ended September 30, 2018, as~~COVID-19 pandemic, compared to the prior year. Colder than normal weather during January 2018 led to TVA setting an all-time record for energy demand in a 24-hour period. Also in January 2018, TVA set three of its top-12 winter peak demand records. In addition, TVA's service territory experienced overall warmer than normal weather during the third and fourth quarters of 2018. Further, approximately $159 million of the increase in base revenue was attributable to higher effective rates during the year ended September 30, 2018, as compared to the prior year, resulting from the base rate adjustment that became effective October 1, 2017. The base revenue increase was also due in part to an approximately $11 million decrease in capitalization of revenue resulting from pre-commercial generation during the year ended September 30, 2018, as compared to the prior year. See Note 1 ~~— Summary of Significant Accounting Policies —Pre-Commercial Plant Operations~~. Partially offsetting these increases was a $142 million decrease in fuel cost recovery revenues, driven by a $305 million decrease attributable to lower fuel rates partially offset by a $163 million increase attributable to higher energy sales. The lower fuel rates experienced were primarily driven by lower market prices for natural gas and a change in the mix of generation resources, including more nuclear, natural gas, and hydroelectric generation and less coal-fired generation.2021.

See Sales of Electricity above for further discussion of the change in the volume of sales of electricity and Operating Expenses below for further discussion of the change in fuel expense.

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Operating Expenses. Operating expense components as a percentage of total operating expenses for ~~2019~~, ~~2018,~~2021 and ~~2017~~2020 consisted of the following:


Operating Expenses (in millions)
	2021		2020		Change		Percent Change
Operating expenses
Fuel	$	1,737	$	1,584	$	153	9.7	%
Purchased power	984		880		104		11.8	%
Operating and maintenance	2,890		2,720		170		6.3	%
Depreciation and amortization	1,533		1,826		(293)		(16.0)	%
Tax equivalents	514		528		(14)		(2.7)	%
Total operating expenses	$	7,658	$	7,538	$	120	1.6	%

The following table summarizes TVA's expenses for various fuels for the years indicated:


Fuel Expense for TVA-Owned Facilities⁽¹⁾ For the years ended September 30	Fuel Expense for TVA-Owned Facilities⁽¹⁾ For the years ended September 30									Fuel Expense for TVA-Owned Facilities(1) For the years ended September 30
	Fuel Expense By Source						Cost per kWh⁽⁴⁾				Fuel Expense By Source				Cost per kWh(4)
	2019		2018		2017		2019	2018	2017		2021		2020			2021		2020
Coal⁽²⁾	$	744	$	847	$	1,060	2.66	2.68	2.71	Coal(2)	$	577	$	533		$	2.46	$	2.69
Natural gas and/or oil-fired⁽³⁾	783		846		706		2.47	2.64	2.78	Natural gas and/or oil-fired(3)	841		660			2.52		1.96
Nuclear fuel	369		374		334		0.58	0.58	0.57	Nuclear fuel	363		378			0.55		0.58
Total fuel	$	1,896	$	2,067	$	2,100	1.54	1.62	1.70	Total fuel	$	1,781	$	1,571		$	1.44	$	1.33

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TENNESSEE VALLEY AUTHORITY

CONSOLIDATED BALANCE SHEETS

At September 30

(in millions)


ASSETS
	2021		2020
Current assets
Cash and cash equivalents	$	499	$	500

Accounts receivable, net	1,566		1,529
Inventories, net	950		1,003
Regulatory assets	196		130
Other current assets	287		84
Total current assets	3,498		3,246

Property, plant, and equipment
Completed plant	66,411		64,970
Less accumulated depreciation	(34,663)		(33,550)
Net completed plant	31,748		31,420
Construction in progress	2,458		2,139
Nuclear fuel	1,566		1,504
Finance leases	692		516
Total property, plant, and equipment, net	36,464		35,579

Investment funds	4,053		3,198

Regulatory and other long-term assets
Regulatory assets	7,956		10,245
Operating lease assets, net of amortization	165		232
Other long-term assets	320		325
Total regulatory and other long-term assets	8,441		10,802

Total assets	$	52,456	$	52,825
The accompanying notes are an integral part of these consolidated financial statements.

ASSETS
2019
2018
Current assets

Cash and cash equivalents $ 299
$ 299
Accounts receivable, net 1,739
1,657
Inventories, net 999
961
Regulatory assets 156
414
Other current assets 85
86
Total current assets 3,278
3,417

Property, plant, and equipment

Completed plant 62,944
61,114
Less accumulated depreciation (31,384 ) (29,335 )
Net completed plant 31,560
31,779
Construction in progress 1,893
1,999
Nuclear fuel 1,534
1,487
Capital leases 146
149
Total property, plant, and equipment, net 35,133
35,414

Investment funds 2,968
2,862

Regulatory and other long-term assets

Regulatory assets 8,763
6,612
Other long-term assets 325
362
Total regulatory and other long-term assets 9,088
6,974

Total assets $ 50,467
$ 48,667
The accompanying notes are an integral part of these consolidated financial statements.

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TENNESSEE VALLEY AUTHORITY

CONSOLIDATED BALANCE SHEETS

At September 30

(in millions)


LIABILITIES AND PROPRIETARY CAPITAL
	2021		2020
Current liabilities
Accounts payable and accrued liabilities	$	2,215	$	1,844

Accrued interest	282		298
Asset retirement obligations	266		345
Current portion of leaseback obligations	25		198

Regulatory liabilities	340		141
Short-term debt, net	780		57
Current maturities of power bonds	1,028		1,787
Current maturities of long-term debt of variable interest entities	43		41

Total current liabilities	4,979		4,711

Other liabilities
Post-retirement and post-employment benefit obligations	5,045		6,617
Asset retirement obligations	6,736		6,440
Finance lease liabilities	687		525
Other long-term liabilities	2,041		2,548
Leaseback obligations	—		25
Regulatory liabilities	40		23
Total other liabilities	14,549		16,178

Long-term debt, net
Long-term power bonds, net	17,457		17,956
Long-term debt of variable interest entities, net	1,006		1,048

Total long-term debt, net	18,463		19,004

Total liabilities	37,991		39,893

Commitments and contingencies (Note 23)

Proprietary capital
Power program appropriation investment	258		258
Power program retained earnings	13,689		12,177
Total power program proprietary capital	13,947		12,435
Nonpower programs appropriation investment, net	540		548
Accumulated other comprehensive income (loss)	(22)		(51)
Total proprietary capital	14,465		12,932

Total liabilities and proprietary capital	$	52,456	$	52,825
The accompanying notes are an integral part of these consolidated financial statements.

LIABILITIES AND PROPRIETARY CAPITAL
2019 2018
Current liabilities
Accounts payable and accrued liabilities $ 1,812
$ 1,982
Accrued interest 296
305
Current portion of leaseback obligations 40
38
Current portion of energy prepayment obligations —
10
Regulatory liabilities 150
187
Short-term debt, net 922
1,216
Current maturities of power bonds 1,030
1,032
Current maturities of long-term debt of variable interest entities 39
38
Current maturities of notes payable 23
46
Total current liabilities 4,312
4,854

Other liabilities
Post-retirement and post-employment benefit obligations 6,181
4,476
Asset retirement obligations 5,453
4,665
Other long-term liabilities 2,490
2,715
Leaseback obligations 223
263
Regulatory liabilities —
104
Total other liabilities 14,347
12,223

Long-term debt, net
Long-term power bonds, net 19,094
20,157
Long-term debt of variable interest entities, net 1,089
1,127
Long-term notes payable —
23
Total long-term debt, net 20,183
21,307

Total liabilities 38,842
38,384

Commitments and contingencies (Note 22)

Proprietary capital
Power program appropriation investment 258
258
Power program retained earnings 10,823
9,404
Total power program proprietary capital 11,081
9,662
Nonpower programs appropriation investment, net 556
564
Accumulated other comprehensive income (loss) (12 ) 57
Total proprietary capital 11,625
10,283

Total liabilities and proprietary capital $ 50,467
$ 48,667
The accompanying notes are an integral part of these consolidated financial statements.

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TENNESSEE VALLEY AUTHORITY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the years ended September 30

(in millions)


	2021		2020		2019
Net income (loss)	$	1,512	$	1,352	$	1,417
Other comprehensive income (loss)
Net unrealized gain (loss) on cash flow hedges	126		(1)		(114)
Net unrealized (gain) loss reclassified to earnings from cash flow hedges	(97)		(38)		45
Total other comprehensive income (loss)	29		(39)		(69)
Total comprehensive income (loss)	$	1,541	$	1,313	$	1,348
The accompanying notes are an integral part of these consolidated financial statements.

2019 2018 2017
Net income (loss) $ 1,417
$ 1,119
$ 685
Other comprehensive income (loss)
Net unrealized gain (loss) on cash flow hedges (114 ) 10
59
Reclassification to earnings from cash flow hedges 45
26
(26 )
Total other comprehensive income (loss) $ (69 ) $ 36
$ 33
Total comprehensive income (loss) $ 1,348
$ 1,155
$ 718
The accompanying notes are an integral part of these consolidated financial statements.

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TENNESSEE VALLEY AUTHORITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended September 30

(in millions)


	2021		2020		2019
Cash flows from operating activities
Net income (loss)	$	1,512	$	1,352	$	1,417
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization(1)	1,555		1,848		1,993
Amortization of nuclear fuel cost	383		388		379
Non-cash retirement benefit expense	333		324		314
Prepayment credits applied to revenue	—		—		(10)


Other regulatory amortization and deferrals	(72)		(21)		261
Changes in current assets and liabilities
Accounts receivable, net	(18)		259		(40)
Inventories and other current assets, net	42		(12)		(87)
Accounts payable and accrued liabilities	178		(38)		(155)
Accrued interest	(18)		1		(8)

Pension contributions	(306)		(305)		(307)

Settlements of asset retirement obligations	(242)		(114)		(89)
Other, net	(91)		(46)		52
Net cash provided by operating activities	3,256		3,636		3,720

Cash flows from investing activities
Construction expenditures	(1,963)		(1,643)		(1,700)

Nuclear fuel expenditures	(354)		(342)		(474)

Purchases of investments	(50)		(49)		(48)
Loans and other receivables
Advances	(7)		(8)		(10)
Repayments	9		7		11
Other, net	27		20		(22)
Net cash used in investing activities	(2,338)		(2,015)		(2,243)

Cash flows from financing activities
Long-term debt
Issues of power bonds	500		997		—

Redemptions and repurchases of power bonds	(1,860)		(1,427)		(1,035)
Payments on debt of variable interest entities	(41)		(39)		(38)
Redemptions of notes payable	—		(23)		(46)
Short-term debt issues (redemptions), net	723		(865)		(294)
Payments on leases and leasebacks	(250)		(55)		(43)

Financing costs, net	(2)		(4)		—


Other, net	9		(6)		(21)
Net cash (used in) provided by financing activities	(921)		(1,422)		(1,477)
Net change in cash, cash equivalents, and restricted cash	(3)		199		—
Cash, cash equivalents, and restricted cash at beginning of year	521		322		322
Cash, cash equivalents, and restricted cash at end of year	$	518	$	521	$	322
Note (1) Including amortization of debt issuance costs and premiums/discounts.
The accompanying notes are an integral part of these consolidated financial statements.

2019 2018 2017
Cash flows from operating activities
Net income (loss) $ 1,417
$ 1,119
$ 685
Adjustments to reconcile net income (loss) to net cash provided by operating activities

Depreciation and amortization⁽¹⁾
1,993
2,554
1,763
Amortization of nuclear fuel cost 379
382
341
Non-cash retirement benefit expense 314
324
837
Prepayment credits applied to revenue (10 ) (100 ) (100 )
Other regulatory amortization and deferrals 261
2
143
Changes in current assets and liabilities

Accounts receivable, net (40 ) (68 ) 230
Inventories and other current assets, net (87 ) 65
1
Accounts payable and accrued liabilities (155 ) 143
(109 )
Accrued interest (8 ) (36 ) (17 )
Pension contributions (307 ) (304 ) (805 )
Settlements of asset retirement obligations (89 ) (106 ) (123 )
Other, net 52
(37 ) (118 )
Net cash provided by operating activities 3,720
3,938
2,728

Cash flows from investing activities

Construction expenditures (1,700 ) (1,759 ) (2,153 )
Nuclear fuel expenditures (474 ) (457 ) (305 )
Purchases of investments (48 ) (49 ) (49 )
Loans and other receivables

Advances (10 ) (12 ) (11 )
Repayments 11
4
8
Other, net (22 ) 4
(26 )
Net cash used in investing activities (2,243 ) (2,269 ) (2,536 )

Cash flows from financing activities

Long-term debt

Issues of power bonds —
998
999
Redemptions and repurchases of power bonds (1,035 ) (1,731 ) (1,558 )
Payments on debt of variable interest entities (38 ) (36 ) (35 )
Redemptions of notes payable (46 ) (53 ) (27 )
Short-term debt issues (redemptions), net (294 ) (782 ) 592
Payments on leases and leasebacks (43 ) (42 ) (136 )
Financing costs, net —
(3 ) (4 )
Other, net (21 ) (9 ) (22 )
Net cash (used in) provided by financing activities (1,477 ) (1,658 ) (191 )
Net change in cash and cash equivalents —
11
1
Cash, cash equivalents, and restricted cash at beginning of year 322
311
310
Cash, cash equivalents, and restricted cash at end of year $ 322
$ 322
$ 311
The accompanying notes are an integral part of these consolidated financial statements.

~~Note~~

~~(1) Including amortization~~Table of ~~debt issuance costs and premiums/discounts.~~Contents

TENNESSEE VALLEY AUTHORITY

CONSOLIDATED STATEMENTS OF CHANGES IN PROPRIETARY CAPITAL

For the years ended September 30

(in millions)


	Power Program Appropriation Investment		Power Program Retained Earnings		Nonpower Programs Appropriation Investment, Net		Accumulated Other Comprehensive Income (Loss)		Total
Balance at September 30, 2018	$	258	$	9,404	$	564	$	57	$	10,283
Net income (loss)	—		1,425		(8)		—		1,417
Total other comprehensive income (loss)	—		—		—		(69)		(69)
Return on power program appropriation investment	—		(6)		—		—		(6)

Balance at September 30, 2019	$	258	$	10,823	$	556	$	(12)	$	11,625
Net income (loss)	—		1,360		(8)		—		1,352
Total other comprehensive income (loss)	—		—		—		(39)		(39)
Return on power program appropriation investment	—		(6)		—		—		(6)
Balance at September 30, 2020	$	258	$	12,177	$	548	$	(51)	$	12,932
Net income (loss)	—		1,520		(8)		—		1,512
Total other comprehensive income (loss)	—		—		—		29		29
Return on power program appropriation investment	—		(4)		—		—		(4)
Implementation of new accounting standard(1)	—		(4)		—		—		(4)
Balance at September 30, 2021	$	258	$	13,689	$	540	$	(22)	$	14,465
Note (1) See Note 2 — Impact of New Accounting Standards and Interpretations.
The accompanying notes are an integral part of these consolidated financial statements.

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Power Program Appropriation Investment

Power Program Retained Earnings
Nonpower Programs Appropriation Investment, Net Accumulated Other Comprehensive Income (Loss)

Total
Balance at September 30, 2016 $ 258
$ 7,594
$ 580
$ (12 ) $ 8,420
Net income (loss) —
693
(8 ) —
685
Total other comprehensive income (loss) —
—
—
33
33
Return on power program appropriation investment —
(5 ) —
—
(5 )
Balance at September 30, 2017 $ 258
$ 8,282
$ 572
$ 21
$ 9,133
Net income (loss) —
1,127
(8 ) —
1,119
Total other comprehensive income (loss) —
—
—
36
36
Return on power program appropriation investment —
(5 ) —
—
(5 )
Balance at September 30, 2018 $ 258
$ 9,404
$ 564
$ 57
$ 10,283
Net income (loss) —
1,425
(8 ) —
1,417
Total other comprehensive income (loss) —
—
—
(69 ) (69 )
Return on power program appropriation investment —
(6 ) —
—
(6 )
Balance at September 30, 2019 $ 258
$ 10,823
$ 556
$ (12 ) $ 11,625
The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions except where noted)


Note		Page No.
1	Summary of Significant Accounting Policies	101
2	Impact of New Accounting Standards and Interpretations	107
3	Accounts Receivable, Net	108
4	Inventories, Net	109
5	Other Current Assets	109
6	Net Completed Plant	109
7	Plant Closures	110
8	Leases	110
9	Other Long-Term Assets	113
10	Regulatory Assets and Liabilities	114
11	Variable Interest Entities	116
12	Other Long-Term Liabilities	119
13	Asset Retirement Obligations	120
14	Debt and Other Obligations	121
15	Accumulated Other Comprehensive Income (Loss)	127
16	Risk Management Activities and Derivative Transactions	127
17	Fair Value Measurements	132
18	Revenue	136
19	Proprietary Capital	140
20	Other Income (Expense), Net	141
21	Supplemental Cash Flow Information	141
22	Benefit Plans	141
23	Commitments and Contingencies	155
24	Related Parties	160

Note Page No.
1 Summary of Significant Accounting Policies
86
2 Impact of New Accounting Standards and Interpretations
92
3 Accounts Receivable, Net
95
4 Inventories, Net
95
5 Net Completed Plant
96
6 Plant Closures
96
7 Other Long-Term Assets
97
8 Regulatory Assets and Liabilities
98
9 Asset Acquisitions
101
10 Variable Interest Entities
101
11 Other Long-Term Liabilities
103
12 Asset Retirement Obligations
104
13 Debt and Other Obligations
105
14 Accumulated Other Comprehensive Income (Loss)
111
15 Risk Management Activities and Derivative Transactions
111
16 Fair Value Measurements
116
17 Revenue
121
18 Proprietary Capital
125
19 Other Income (Expense), Net
126
20 Supplemental Cash Flow Information
126
21 Benefit Plans
126
22 Commitments and Contingencies
140
23 Related Parties
145
24 Unaudited Quarterly Financial Information
146
25 Subsequent Events
147

1. Summary of Significant Accounting Policies

General

The Tennessee Valley Authority ("TVA") is a corporate agency and instrumentality of the United States ("U.S.") that was created in 1933 by federal legislation in response to a proposal by President Franklin D. Roosevelt. TVA was created to, among other things, improve navigation on the Tennessee River, reduce the damage from destructive flood waters within the Tennessee River system and downstream on the lower Ohio and Mississippi Rivers, further the economic development of TVA's service area in the southeastern U.S., and sell the electricity generated at the facilities TVA operates.

Today, TVA operates the nation's largest public power system and supplies power in most of Tennessee, northern Alabama, northeastern Mississippi, and southwestern Kentucky and in portions of northern Georgia, western North Carolina, and southwestern Virginia to a population of ~~nearly~~approximately 10 million people.

The power program has historically been separate and distinct from the stewardship programs. It is required to be self-supporting from power revenues and proceeds from power financings, such as proceeds from the issuance of bonds, notes, or other evidences of indebtedness (collectively, "Bonds"). Although TVA does not currently receive congressional appropriations, it is required to make annual payments to the United States Department of the Treasury ("U.S. Treasury") as a return on the government's appropriation investment in TVA's power facilities (the "Power Program Appropriation Investment"). In the 1998 Energy and Water Development Appropriations Act, Congress directed TVA to fund essential stewardship activities related to its management of the Tennessee River system and nonpower or stewardship properties with power revenues in the event that there were insufficient appropriations or other available funds to pay for such activities in any fiscal year. Congress has not

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provided any appropriations to TVA to fund such activities since 1999. Consequently, during 2000, TVA began paying for essential stewardship activities primarily with power revenues, with the remainder funded with user fees and other forms of revenues derived in connection with those activities. The activities related to stewardship properties do not meet the criteria of an operating segment under accounting principles generally accepted in the United States of America ("GAAP"). Accordingly, these assets and properties are included as part of the power program, TVA's only operating segment.

Power rates are established by the TVA Board of Directors (the "TVA Board") as authorized by the Tennessee Valley Authority Act of 1933, as amended (the "TVA Act"). The TVA Act requires TVA to charge rates for power that will produce gross revenues sufficient to provide funds for operation, maintenance, and administration of its power system; payments to states and counties in lieu of taxes ("tax equivalents"); debt service on outstanding indebtedness; payments to the U.S. Treasury in repayment of and as a return on 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. TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment with the 2014 payment; therefore, this item is no longer a component of rate setting. In setting TVA's rates, 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 shall be sold at rates as low as are feasible. Rates set by the TVA Board are not subject to review or approval by any state or other federal regulatory body.

Fiscal Year

TVA's fiscal year ends September 30. Years (~~2019~~, ~~2018~~,(2021, 2020, etc.) refer to TVA's fiscal years unless they are preceded by "CY," in which case the references are to calendar years.

Cost-Based Regulation

Since the TVA Board is authorized by the TVA Act to set rates for power sold to its customers, TVA is self-regulated. Additionally, TVA's regulated rates are designed to recover its costs. Based on current projections, TVA believes that rates, set at levels that will recover TVA's costs, can be charged and collected. As a result of these factors, TVA records certain assets and liabilities that result from the regulated ratemaking process that would not be recorded under GAAP for non-regulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities generally represent obligations to make refunds to customers for previous collections for costs that are not likely to be incurred or deferral of gains that will be credited to customers in future periods. TVA assesses whether the regulatory assets are probable of future recovery by considering factors such as applicable regulatory changes, potential legislation, and changes in technology. Based on these assessments, TVA believes the existing regulatory assets are probable of recovery. This determination reflects the current regulatory and political environment and is subject to change in the future. If future recovery of regulatory assets ceases to be probable, or ~~any of the other factors described above cease to be applicable,~~ TVA ~~would~~is no longer be considered to be a regulated entity, ~~and~~then costs would be required to ~~write off these costs.~~be written off. All regulatory asset write offs would be required to be recognized in earnings in the period in which future recovery ceases to be probable.

Basis of Presentation

The accompanying consolidated financial statements, which have been prepared in accordance with GAAP, include the accounts of TVA ~~wholly-owned direct subsidiaries,~~ and variable interest entities ("~~VIE"~~VIEs") of which TVA is the primary beneficiary. See Note 911 — ~~Asset Acquisitions~~ ~~and Note 10 —~~ Variable Interest Entities. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements requires TVA to estimate the effects of various matters that are inherently uncertain as of the date of the consolidated financial statements. Although the consolidated financial statements are prepared in conformity with GAAP, TVA is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the amounts of revenues and expenses, including impacts from the Coronavirus Disease 2019 ("COVID-19") pandemic, reported during the reporting period. Each of these estimates varies in regard to the level of judgment involved and its potential impact on TVA's financial results. Estimates are considered critical either when a different estimate could have reasonably been used, or where changes in the estimate are reasonably likely to occur from period to period, and such use or change would materially impact TVA's financial condition, results of operations, or cash flows.

~~Reclassifications~~

Certain historical amounts have been reclassified in the accompanying consolidated financial statements to the current presentation. TVA reclassified $256 million and $758 million of net periodic benefit costs from Operating and maintenance expense to Other net periodic benefit cost in the Consolidated Statements of Operations for the years ending September 30, 2018 and 2017, respectively, as a result of the retrospective presentation of financing costs due to the implementation of the new

accounting standard for defined benefit plan costs effective for TVA October 1, 2018. TVA also reclassified $13 million from Restricted cash and cash equivalents to Other long-term assets on the Consolidated Balance Sheet at September 30, 2018.

In the September 30, 2018, Consolidated Statements of Cash Flows, amounts previously reported as $(30) million Fuel cost adjustment deferral, $(7) million Fuel cost tax equivalents, and $39 million Other, net were consolidated and presented as $2 million Other regulatory amortization and deferrals. Additionally, $(22) million in cash flows from operating activities previously recorded as $(9) million Accounts payable and accrued liabilities and $(13) million Regulatory asset costs were reclassified to Other, net. In cash flows from financing activities, $(5) million previously recorded as Payments to U.S. Treasury was reclassified to Other, net.

In the September 30, 2017, Consolidated Statements of Cash Flows, amounts previously reported as $98 million Fuel cost adjustment deferral, $5 million Fuel cost tax equivalents, and $40 million Other, net were consolidated and presented as $143 million Other regulatory amortization and deferrals. Additionally, $(60) million in cash flows from operating activities previously recorded as $(10) million Accounts payable and accrued liabilities and $(50) million Regulatory asset costs were reclassified to Other, net. In cash flows from financing activities, $(5) million previously recorded as Payments to U.S. Treasury was reclassified to Other, net.

Additionally, as a result of the implementation of the new accounting standard for Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments, $(29) million and $(9) million were reclassified from Short-term debt issues (redemptions), net in cash flows from financing to Other, net in cash flows from operating activities in 2018 and 2017, respectively.

~~Cash,~~0Cash, Cash Equivalents, and Restricted Cash

Cash includes cash on hand, non-interest bearing cash, and deposit accounts. All highly liquid investments with original maturities of three months or less are considered cash equivalents. Cash and cash equivalents that are restricted, as to withdrawal or use under the terms of certain contractual agreements, are recorded in Other long-term assets on the Consolidated Balance Sheets. Restricted cash and cash equivalents ~~includes~~include cash held in trusts that are currently restricted for TVA economic development loans and for certain TVA environmental programs in accordance with agreements related to

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compliance with certain environmental regulations. See Note 22 23 — Commitments and Contingencies — Legal Proceedings — Environmental Agreements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported inon the Consolidated Balance Sheets and Consolidated Statements of Cash Flows:


Cash, Cash Equivalents, and Restricted Cash At September 30
	2021		2020
Cash and cash equivalents	$	499	$	500
Restricted cash and cash equivalents included in Other long-term assets	19		21
Total cash, cash equivalents, and restricted cash	$	518	$	521

Cash, Cash Equivalents, and Restricted Cash
At September 30
2019 2018
Cash and cash equivalents $ 299
$ 299
Restricted cash and cash equivalents, included in Other long-term assets 23
23
Total Cash, cash equivalents, and restricted cash $ 322
$ 322

OnDue to higher volatility in the ~~September 30, 2018 and 2017, Consolidated Statements~~financial markets associated with the COVID-19 pandemic, TVA increased its balance of Cash ~~Flows, transfers between~~and cash ~~and restricted~~equivalents beginning in March 2020. TVA may hold higher cash ~~were previously reported as $12 million and $1 million, respectively, as Other, net~~balances from time to time in ~~cash flows from operating activities. Due~~response to ~~the implementation of the new accounting standard for restricted cash in 2019, these amounts are not reported as cash flow activities on the Consolidated Statement of Cash Flows.~~ potential market volatility or other business conditions.

Allowance for Uncollectible Accounts

As described in Note 2 — Impact of New Accounting Standards and Interpretations, TVA adopted Financial Instruments - Credit Losses on October 1, 2020, using a modified retrospective method through a cumulative-effect adjustment to retained earnings. The standard, Current Expected Credit Losses ("CECL"), requires TVA to recognize an allowance that reflects the current estimate for ~~uncollectible accounts reflects TVA's~~credit losses expected to be incurred over the life of the financial assets based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amounts. TVA has reviewed the current portfolio of financial receivables and developed a methodology to reasonably measure the estimate of ~~probable~~credit losses ~~inherent in its~~for each major financial receivable type. The appropriateness of the allowance is evaluated at the end of each reporting period. TVA continues to monitor the impact of the COVID-19 pandemic on accounts and loans receivable balances ~~excluding the EnergyRight~~^®~~loans receivable. TVA determines~~to evaluate the allowance ~~based on known accounts,~~for uncollectible accounts.

To determine the allowance for trade receivables, TVA considers historical experience and other currently available information, including events such as customer bankruptcy and/or ~~customers~~a customer failing to fulfill payment arrangements ~~after 90 days. It also reflects~~by the due date. TVA's corporate credit ~~department's~~department also performs an assessment of the financial condition of customers and the credit quality of the receivables. In addition, TVA reviews other reasonable and supportable forecasts to determine if the allowance for uncollectible amounts should be further adjusted in accordance with the accounting guidance for CECL.

To determine the allowance for loans receivables, TVA aggregates loans into the appropriate pools based on the existence of similar risk characteristics such as collateral types and internal assessed credit risks. In situations where a loan exhibits unique risk characteristics and is no longer expected to experience similar risks to the rest of its pool, the loan will be evaluated separately. TVA derives an annual loss rate based on historical loss and then adjusts the rate to reflect TVA's consideration of available information on current conditions and reasonable and supportable future forecasts. This information may include economic and business conditions, default trends, and other internal and external factors. For periods beyond the reasonable and supportable forecast period, TVA uses the current calculated long-term average historical loss rate for the remaining life of the loan portfolio.

The allowance for uncollectible accounts was less than $1 million at both September 30, ~~2019~~2021 and ~~2018,~~2020, for trade accounts receivable. Additionally, loans receivable of ~~$131~~$99 million and ~~$138~~$105 million at September 30, ~~2019~~2021 and ~~2018,~~2020, respectively, are included in Accounts receivable, net and Other long-term assets, for the current and long-term portions, ~~respectively, and~~respectively. Loans receivables are reported net of allowances for uncollectible accounts of $4 million and less than $1 million at ~~both~~ September 30, ~~2019~~2021 and ~~2018,~~2020, respectively. The increase in allowances for uncollectible accounts is due to the adoption of CECL. See Note 2 — Impact of New Accounting Standards and Interpretations.

Revenues

TVA recognizes revenue from contracts with customers to depict the transfer of goods or services to customers in an amount to which the entity expects to be entitled in exchange for those goods or services. For the generation and transmission

of electricity, this is generally at the time the power is delivered to a metered customer delivery point for the customer's consumption or distribution. As a result, revenues from power sales are recorded as electricity is delivered to customers. In addition to power sales invoiced and recorded during the month, TVA accrues estimated unbilled revenues for power sales provided to five customers whose billing date occurs prior to the end of the month. Exchange power sales are presented in the accompanying Consolidated Statements of Operations as a component of sales of electricity. Exchange power sales are sales of excess power after meeting TVA native load and directly served requirements. Native load refers to the customers on whose behalf a company, by statute, franchise, regulatory requirement, or contract, has undertaken an obligation to serve. TVA engages in other arrangements in addition to power sales. Certain other revenue from activities related to TVA's overall mission ~~are~~is recorded in Other revenue. Revenues that are not related to the overall mission are recorded in Other income (expense), net.

103

~~Pre-Commercial Plant Operations~~

~~As part~~Table of ~~the process of completing the construction of a generating unit, the electricity produced is used to serve the~~Contents

demands of the electric system. TVA estimates revenue from such pre-commercial generation based on the guidance provided by Federal Energy Regulatory Commission ("FERC") regulations. Watts Bar Nuclear Plant ("Watts Bar") Unit 2 commenced pre-commercial plant operations in June 2016, and commercial operations began in October 2016. In addition, the Paradise Combined Cycle Plant ("Paradise CC") commenced pre-commercial plant operations in October 2016, and commercial operations began in April 2017. The Allen Combined Cycle Plant ("Allen CC") began pre-commercial plant operations in September 2017, and began commercial operations in April 2018. Cogeneration capability at Johnsonville Combustion Turbine Unit 20 commenced pre-commercial plant operations in September 2017, and was placed in service during December 2017. Estimated revenue of $11 million related to these projects was capitalized to offset project costs for the year ended September 30, 2018. TVA also capitalized related fuel costs for these construction projects of approximately $19 million during the year ended September 30, 2018. No such amounts were capitalized during 2019.

Inventories

CertainFuel, Materials, and Supplies. Materials and supplies inventories are valued using an average unit cost method. A new average cost is computed after each inventory purchase transaction, and inventory issuances are priced at the latest moving weighted average unit cost. Coal, fuel oil, and natural gas inventories are valued using an average cost method. A new weighted average cost is computed monthly, and monthly issues are priced accordingly.

Renewable Energy Credits. TVA accounts for Renewable Energy Certificates ("RECs") using the specific identification cost method. RECs that are acquired through power purchases are recorded as inventory and charged to purchased power expense when the RECs are subsequently used or sold. TVA assigns a value to the RECs at the inception of the power purchase arrangement using a relative fair value approach. RECs created through TVA-owned asset generation are recorded at zero cost.

Emission Allowances. TVA has emission allowances for sulfur dioxide ("SO₂")and nitrogen oxide ("("NO_x") which are accounted for as inventory. The cost of specific allowances used each month is charged to operating expense based on tons of SO₂ and NO_x emitted during the respective compliance periods. Allowances granted to TVA by the Environmental Protection Agency ("EPA") are recorded at zero cost.

Allowance for Inventory Obsolescence. TVA reviews materials and supplies inventories by category and usage on a periodic basis. Each category is assigned a probability of becoming obsolete based on the type of material and historical usage data. ~~In 2018,~~ TVA ~~started moving from~~has a ~~site-specific~~fleet-wide inventory management policy ~~to a fleet-wide strategy~~ for each generation type. Based on the estimated value of the inventory, TVA adjusts its allowance for inventory obsolescence.

Property, Plant, and Equipment, and Depreciation

Property, Plant, and Equipment. Additions to plant are recorded at cost, which includes direct and indirect costs. The cost of current repairs and minor replacements is charged to operating expense. Nuclear fuel, which is included in Property, plant, and equipment, is valued using the average cost method for raw materials and the specific identification method for nuclear fuel in a reactor. Amortization of nuclear fuel in a reactor is calculated on a units-of-production basis and is included in fuel expense. When property, plant, and equipment is retired, accumulated depreciation is charged for the original cost of the assets. Gains or losses are only recognized upon the sale of land or an entire operating unit.

Depreciation. TVA accounts for depreciation of its properties using the composite depreciation convention of accounting. Under the composite method, assets with similar economic characteristics are grouped and depreciated as one asset. Depreciation is generally computed on a straight-line basis over the estimated service lives of the various classes of assets. The estimation of asset useful lives requires management judgment, supported by external depreciation studies of historical asset retirement experience. Depreciation rates are determined based on ~~the~~ external depreciation ~~studies. These~~ studies ~~will be~~that are updated ~~at least~~approximately every five years. During the first quarter of 2022, TVA implemented a new depreciation study related to its completed plant. The new study includes a decline in the service life estimates of TVA’s coal-fired plants based on current planning assumptions to potentially retire the remainder of the coal-fired fleet by 2035. Implementation of the study is expected to result in an increase to depreciation and amortization expense of approximately $369 million during 2022. This estimate represents the impact of implementing the new study only and does not include any potential impact of other possible changes, including additions to or retirements of net completed plant, that may occur during 2022.

Depreciation expense for the years ended September 30, 2021, 2020, and 2019 ~~2018, and 2017~~ was ~~$1.8~~$1.4 billion, ~~$1.3~~$1.6 billion, and ~~$1.3~~$1.8 billion, respectively. Depreciation expense expressed as a percentage of the

average annual depreciable completed plant was 2.28 percent for 2021, 2.74 percent for 2020, and 3.09 percent for ~~2019, 2.45 percent for 2018, and 2.49 percent for 2017.~~2019. Average depreciation rates by asset class are as follows:


Property, Plant, and Equipment Depreciation Rates At September 30 (percent)	Property, Plant, and Equipment Depreciation Rates At September 30 (percent)			Property, Plant, and Equipment Depreciation Rates At September 30 (percent)
	2019	2018	2017		2021	2020	2019
Asset Class				Asset Class
Nuclear	2.38	2.64	2.66	Nuclear	2.38	2.38	2.38
Coal-fired⁽¹⁾	4.96	2.32	2.33	Coal-fired(1)	1.95	3.62	4.96
Hydroelectric	1.61	1.57	1.58	Hydroelectric	1.60	1.60	1.61
Gas and oil-fired	3.00	2.93	3.27	Gas and oil-fired	2.98	3.04	3.00
Transmission	1.34	1.32	1.34	Transmission	1.34	1.34	1.34
Other	7.16	5.90	6.12	Other	7.12	7.26	7.16

Note

(1) The ~~rate for 2019 includes~~rates include the acceleration of depreciation related to retiring certain coal-fired units.

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Coal-Fired. As a result of TVA's decision to idle or retire certain units since the previous depreciation study, TVA recognized ~~$566~~$136 million, ~~$48~~$387 million, and ~~$104~~$566 million in accelerated depreciation expense related to the units during the years ended September 30, ~~2019, 2018,~~2021, 2020, and ~~2017,~~2019, respectively. Accelerated depreciation is based on the remaining useful life of the asset at the time the decision is made to idle or retire a unit.

~~Capital Lease Agreements.~~ Assets recorded under capital lease agreements are included in property, plant, and equipment. These primarily consist of a natural gas lateral pipeline, power production facilities, water treatment assets, certain office equipment, and land of $146 million and $149 million at September 30, 2019 and 2018, respectively. Amortization expense related to capital leases is included in Depreciation and amortization in TVA's statement of operations, excluding leases and other financing obligations where regulatory accounting is applied. See Note 8 — ~~Regulatory Assets and Liabilities~~ — ~~Other Non-Current Regulatory Assets~~ — ~~Deferred Capital Leases and Other Financing Obligations.~~

Reacquired Rights. Property, plant, and equipment includes intangible reacquired rights, net of amortization, of ~~$200~~$184 million and ~~$208~~$192 million as of September 30, ~~2019~~2021 and ~~2018,~~2020, respectively, related to the purchase of residual interests from lease/leaseback agreements of certain combustion turbine ~~units.~~units ("CTs"). Reacquired rights are amortized over the estimated useful life of the underlying CTs. Amortization expense was $8 million ~~$8 million,~~for all years 2021, 2020, and ~~$4 million for 2019, 2018, and 2017, respectively. See Note 9~~ ~~— Asset Acquisitions~~.2019.

Software Costs. TVA capitalizes certain costs incurred in connection with developing or obtaining internal-use software. Capitalized software costs are included in Property, plant, and equipment on the Consolidated Balance Sheets and are generally amortized over seven years. At September 30, ~~2019~~2021 and ~~2018,~~2020, unamortized computer software costs totaled ~~$63~~$27 million and ~~$53~~$54 million, respectively. Amortization expense related to capitalized computer software costs was $38 million, ~~$32~~$42 million, and ~~$26~~$38 million for ~~2019, 2018,~~2021, 2020, and ~~2017,~~2019, respectively. Software costs that do not meet capitalization criteria are expensed as incurred.

Impairment of Assets. TVA evaluates long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. For long-lived assets, TVA bases its evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, regulatory approval and ability to set rates at levels that allow for recoverability of the assets, and other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of an asset may not be recoverable, TVA determines whether an impairment has occurred based on an estimate of undiscounted cash flows attributable to the asset as compared with the carrying value of the asset. If an impairment has occurred, the amount of the impairment recognized is measured as the excess of the asset's carrying value over its fair value. Additionally, TVA regularly evaluates construction projects. If the project is canceled or deemed to have no future economic benefit, the project is written off as an asset impairment or, upon TVA Board approval, reclassified as a regulatory asset. See Note 67 — Plant Closures.

Leases

TVA recognizes a lease asset and lease liability for leases with terms of greater than 12 months. Lease assets represent TVA's right to use an underlying asset for the lease term, and lease liabilities represent TVA's obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. TVA has certain lease agreements that include variable lease payments that are based on energy production levels. These variable lease payments are not included in the measurement of the lease assets or lease liabilities but are recognized in the period in which the expenses are incurred.

While not specifically structured as leases, certain power purchase agreements ("PPAs") are deemed to contain a lease of the underlying generating units when the terms convey the right to control the use of the assets. Amounts recorded for these leases are generally based on the amount of the scheduled capacity payments due over the remaining terms of the PPAs, the terms of which vary. The total lease obligations included in Accounts payable and accrued liabilities and lease liabilities related to these agreements were $464 million and $143 million for finance and operating leases, respectively, at September 30, 2021.

TVA has agreements with lease and non-lease components and has elected to account for the components separately. Consideration is allocated to lease and non-lease components generally based on relative standalone selling prices.

TVA has lease agreements which include options for renewal and early termination. The intent to renew a lease varies depending on the lease type and asset. Renewal options that are reasonably certain to be exercised are included in the lease measurements. The decision to terminate a lease early is dependent on various economic factors. No termination options have been included in TVA's lease measurements.

Leases with an initial term of 12 months or less, which do not include an option to extend the initial term of the lease to greater than 12 months that TVA is reasonably certain to exercise, are not recorded on the Consolidated Balance Sheets at September 30, 2021.

Operating leases are recognized on a straight-line basis over the term of the lease agreement. Rent expense associated with short-term leases and variable leases is recorded in Operating and maintenance expense, Fuel expense, or Purchased power expense on the Consolidated Statements of Operations. Expenses associated with finance leases result in the separate presentation of interest expense on the lease liability and amortization expense of the related lease asset on the Consolidated Statements of Operations.

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Decommissioning Costs

TVA recognizes legal obligations associated with the future retirement of certain tangible long-lived assets. These obligations relate to fossil fuel-fired generating plants, nuclear generating plants, hydroelectric generating plants/dams, transmission structures, and other property-related assets. ~~These other property-related assets include, but are not limited to, easements and coal rights.~~ Activities involved with retiring these assets could include decontamination and demolition of structures, removal and disposal of wastes, and site restoration. Revisions to the estimates of asset retirement obligations ("AROs") are made whenever factors indicate that the timing or amounts of estimated cash flows have changed materially. Any accretion or depreciation expense related to these liabilities and assets is charged to a regulatory asset. See Note 810 —

Regulatory Assets and Liabilities — Nuclear Decommissioning Costs and Non-Nuclear Decommissioning Costs and Note 1213 — Asset Retirement Obligations.

~~Blended Low-Enriched Uranium Program~~Down-blend Offering for Tritium

~~Under the blended low-enriched uranium ("BLEU") program,~~ TVA, the U.S. Department of Energy ("DOE"), and certain nuclear fuel contractors have entered into agreements, providing for the DOE's surplus of enriched uranium to be blended with other uranium down to a level that allows the blended uranium to be fabricated into fuel that can be used in nuclear power plants. Under the terms of an interagency agreement between TVA and the DOE, in exchange for supplying highly enriched uranium materials to the appropriate third-party fuel processors for processing into usable BLEU fuel for TVA, the DOE participates to a degree in the savings generated by TVA's use of this blended nuclear fuel. TVA accrues an obligation with each BLEU reload batch related to the portion of the ultimate future payments estimated to be attributable to the BLEU fuel currently in use. TVA estimated DOE's portion of the cost savings from the program to be $166 million since 2006. The last reload of BLEU material is currently underway at Browns Ferry Nuclear Plant ("Browns Ferry"). Since 2011, total payments to the DOE amounted to approximately $165 million for this program. No payments were made during the year ended September 30, 2019, and the remaining obligation recorded was $1 million at September 30, 2019.

~~Down-blend Offering for Tritium~~

~~TVA, the DOE, and certain nuclear fuel contractors have entered into agreements,~~ referred to as the Down-blend ~~offering~~Offering for Tritium ("DBOT"), that provide for the production, processing, and storage of low-enriched uranium that is to be made using surplus DOE highly enriched uranium and other uranium. Low-enriched uranium can be fabricated into fuel for use in a nuclear power plant. Production of the low-enriched uranium began in ~~the summer of~~ 2019 and is contracted to continue through October 2027. Beginning October 2027, contract activity will consist of storage and flag management. Flag management ensures that the uranium is of U.S. origin, free from foreign obligations, and unencumbered by policy restrictions, so that it can be used in connection with the production of tritium. Under the terms of the interagency agreement between the DOE and TVA, the DOE will reimburse TVA for a portion of the costs of converting the highly enriched uranium to low-enriched uranium. ~~During the year ended September 30,~~Since 2019, TVA has received ~~$23~~$137 million in reimbursements from the DOE. At September 30, ~~2019,~~2021, TVA recorded $6$11 million in Accounts receivable, net related to this agreement.

Investment Funds

Investment funds consist primarily of trust funds designated to fund decommissioning requirements (see Note 2223 — Commitments andContingencies — Decommissioning Costs), the Supplemental Executive Retirement Plan ("SERP") (see Note 2122 — Benefit Plans— Overview of Plans and Benefits — Supplemental Executive Retirement Plan), and the Deferred Compensation Plan ("DCP"). The Nuclear Decommissioning Trust ("NDT") holds funds primarily for the ultimate decommissioning of TVA's nuclear power plants. The Asset Retirement Trust ("ART") holds funds primarily for the costs related to the future closure and retirement of TVA's other long-lived assets. The NDT, ART, SERP, and DCP funds are invested in portfolios of securities generally designed to achieve a return in line with overall equity and debt market performance. The NDT, ART, SERP, and DCP funds are all classified as trading.

~~Energy Prepayment Obligations~~

In 2004, TVA and its largest customer, Memphis Light, Gas and Water Division ("MLGW"), entered into an energy prepayment agreement under which MLGW prepaid TVA $1.5 billion for the future costs of electricity to be delivered by TVA to MLGW over a period of ~~180 months~~. TVA accounted for the prepayment as unearned revenue and reported the obligation to deliver power under this arrangement as Energy prepayment obligations and Current portion of energy prepayment obligations on the September 30, 2018 Consolidated Balance Sheet. The arrangement ceased in 2019. Revenue was recognized in each year of the arrangement as electricity was delivered to MLGW based on the ratio of units of kilowatt hours delivered to total units of kilowatt hours under contract. As of September 30, 2019, $1.5 billion had been recognized as non-cash revenue on a cumulative basis during the life of the agreement, $10 million and $100 million of which was recognized as non-cash revenue during 2019 and 2018, respectively.

Discounts to account for the time value of money, which are recorded as a reduction to electricity sales, amounted to $4 million and $46 million for the years ended September 30, 2019 and 2018, respectively.

Insurance

Although TVA uses private companies to administer its healthcare plans for eligible active and retired employees not covered by Medicare, TVA does not purchase health insurance. Third-party actuarial specialists assist TVA in determining certain liabilities for self-insured claims. TVA recovers the costs of claims through power rates and through adjustments to the participants' contributions to their benefit plans. These liabilities are included in Other liabilities on the Consolidated Balance Sheets.

TVA sponsors an Owner Controlled Insurance Program which provides workers' compensation and liability insurance for a select group of contractors performing maintenance, modifications, outage, and new construction activities at TVA facilities.

The Federal Employees' Compensation Act ("FECA") governs liability to employees for service-connected injuries. TVA purchases excess workers' compensation insurance above a self-insured retention.

In addition to excess workers' compensation insurance, TVA purchases ~~the following types of insurance:~~

~~Nuclear liability insurance; nuclear~~ property ~~decommissioning,~~ and ~~decontamination insurance; and nuclear accidental outage insurance. See Note 22 —~~ ~~Commitments andContingencies~~ — ~~Nuclear Insurance~~.

~~Excess~~ liability insurance for ~~aviation, auto, marine,~~nuclear assets and ~~general~~operations. See Note 23 — Commitments and Contingencies — Nuclear Insurance. TVA also purchases liability ~~exposures.~~

~~Property~~insurance and property insurance for certain conventional (non-nuclear) ~~assets.~~assets, and other insurance policies when commercially feasible.

The insurance policies are subject to the terms and conditions of the specific policy, including deductibles or self-insured retentions. To the extent insurance would not provide either a partial or total recovery of the costs associated with a loss, TVA would have to recover any such costs through other means, including through power rates.

Research and Development Costs

Research and development costs are expensed when incurred. TVA's research programs include those related to power delivery technologies, emerging technologies (clean energy, renewables, distributed resources, and energy efficiency), technologies related to generation (fossil fuel, nuclear, and hydroelectric), and environmental technologies.

Tax Equivalents

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conducts its power operations and in which TVA has acquired power properties previously subject to state and local taxation. The total amount of these payments is five percent of gross revenues from sales of power during the preceding year, excluding sales or deliveries to other federal agencies and off-system sales with other utilities, with a provision for minimum payments under certain circumstances. TVA calculates tax equivalent expense by subtracting the prior year fuel cost-related tax equivalent regulatory asset or liability from the payments made to the states and counties during the current year and adding back the current year fuel cost-related tax equivalent regulatory asset or liability. Fuel cost-related tax equivalent expense is recognized in the same accounting period in which the fuel cost-related revenue is recognized.

Maintenance Costs

TVA records maintenance costs and repairs related to its property, plant, and equipment inon the Consolidated Statements of Operations as they are incurred except for the recording of certain regulatory assets for retirement and removal costs.

2. Impact of New Accounting Standards and Interpretations

The following are accounting standard updates issued by the Financial Accounting Standards Board ("FASB") that TVA adopted during ~~2019:~~

2021:



~~Defined Benefit Costs~~
~~Description~~	This guidance changes how information about defined benefit costs for pension plans and other post-retirement benefit plans is presented in employer financial statements. The guidance requires employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit and settlement and curtailment effects, are to be included in non-operating expenses. Additionally, the guidance stipulates that only the service cost component of net benefit cost is eligible for capitalization in assets. The guidance requires retrospective presentation of the service and non-service cost components in the Consolidated Statements of Operations.
~~Effective Date for TVA~~	~~October 1, 2018~~
~~Effect on the Financial Statements or Other Significant Matters~~	TVA adopted this standard on a retrospective basis for the prior periods presented resulting in a reclassification of net periodic benefit costs from Operating and maintenance expense to Other net periodic benefit cost in the Consolidated Statements of Operations of $256 million and $758 million during 2018 and 2017, respectively. There was no impact on the Consolidated Balance Sheets because TVA has historically capitalized only the service cost component, which is consistent with the new guidance. See Note 1 ~~— Summary of Significant Accounting Policies — Reclassifications~~ ~~for additional details.~~



~~Financial Instruments~~
~~Description~~	This guidance applies to the recognition and measurement of financial assets and liabilities. The standard requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The standard also amends presentation requirements related to certain changes in the fair value of a liability and eliminates certain disclosure requirements of significant assumptions for financial instruments measured at amortized cost on the balance sheet. Public entities must apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.
~~Effective Date for TVA~~	~~October 1, 2018~~
~~Effect on the Financial Statements or Other Significant Matters~~	TVA currently measures all of its equity investments (other than those that result in the consolidation of the investee) at fair value, with changes in the fair value recognized through net income, unless regulatory accounting is applied. The TVA Board has authorized the use of regulatory accounting for changes in fair value of certain equity investments, and as a result, those changes in fair value are deferred as regulatory assets or liabilities. TVA currently discloses significant assumptions around its estimates of fair value for financial instruments carried at amortized cost on its consolidated balance sheet. The adoption of this standard did not have a material impact on TVA's financial condition, results of operations, or cash flows because changes in fair value accounting are recognized through regulatory accounting.

~~Revenue from Contracts with Customers~~
~~Description~~	This guidance, including subsequent amendments, replaces the existing accounting standard and industry specific guidance for revenue recognition with a five-step model for recognizing and measuring revenue from contracts with customers. The underlying principle of the guidance is to recognize revenue related to the transfer of goods or services to customers at the amount expected to be collected. The objective of the new standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within and across industries. The new standard also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenue and the related cash flows arising from contracts with customers.
~~Effective Date for TVA~~	~~October 1, 2018~~
~~Effect on the Financial Statements or Other Significant Matters~~	TVA adopted this standard using the modified retrospective method with no material changes to the amount or timing of revenue recognition. In accordance with the modified retrospective method, TVA's previously issued financial statements have not been restated to comply with the new accounting standard. TVA recognizes revenue when it satisfies a performance obligation by transferring control to the customer. For the generation and transmission of electricity, this is generally at the time the power is delivered to a metered customer delivery point for a customer's consumption or distribution. As a result, revenues from power sales are recorded as electricity is delivered to customers. TVA utilized certain practical expedients including applying the guidance to open contracts at the date of adoption, applying the guidance to a portfolio of contracts with similar characteristics, and recognizing revenue in the amount for which it has the right to invoice. ~~As a result of adoption of the standard, TVA did not have a cumulative-effect adjustment to proprietary capital.~~

~~Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments~~
~~Description~~	This standard adds or clarifies guidance on the classification of certain cash receipts and payments on the statement of cash flows as follows: debt prepayment or extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies and bank-owned life insurance policies, distributions received from equity method investees, beneficial interest in securitization transactions, and the application of the predominance principle to separately identifiable cash flows.
~~Effective Date for TVA~~	~~October 1, 2018~~
~~Effect on the Financial Statements or Other Significant Matters~~	TVA adopted this standard on a retrospective basis for the prior periods presented. The adoption of this standard resulted in a reclassification of certain cash payments of $29 million and $9 million from financing activities to operating activities shown on the Consolidated Statements of Cash Flows for 2018 and 2017, respectively. The changes did not have a material impact on TVA's financial condition and results of operations. See Note 1 ~~— Summary of Significant Accounting Policies — Reclassifications~~ ~~for additional details.~~

~~Statement of Cash Flows - Restricted Cash~~
~~Description~~	This guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance does not provide a definition of restricted cash or restricted cash equivalents.
~~Effective Date for TVA~~	~~October 1, 2018~~
~~Effect on the Financial Statements or Other Significant Matters~~	Adoption of this standard resulted in a change to the beginning-of-period and end-of-period cash and cash equivalents and restricted cash amounts presented on the Consolidated Statements of Cash Flows. Amounts previously reported as Other, net in cash flows from operating activities of transfers from cash and restricted cash are not reported as cash flow activities. See Note 1 — ~~Summary of Significant Accounting Policies~~—~~Cash, Cash Equivalents, and Restricted Cash~~ ~~for additional details. TVA applied this standard on a retrospective basis for the prior periods presented.~~

~~The following accounting standards have been issued but as of September 30, 2019, were not effective and had not been adopted by TVA:~~

~~Lease Accounting~~

~~Description~~

This guidance changes the provisions of recognition in both the lessee and lessor accounting models. The standard requires entities that lease assets ("lessees") to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with terms of more than 12 months, while also refining the definition of a lease. In addition, lessees are required to disclose key information about the amount, timing and uncertainty of cash flows arising from leasing arrangements. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depend on its classification as a finance lease (formerly referred to as capital lease) or operating lease. The standard requires both types of leases to be recognized on the balance sheet. Operating leases will result in straight-line expense, while finance leases will result in recognition of interest expense on the lease liability separate from amortization expense. The accounting rules for the owner of assets leased by the lessee ("lessor accounting") remain relatively unchanged.

The standard allows for certain practical expedients to be elected related to lease term determination, separation of lease and non-lease elements, reassessment of existing leases, and short-term leases. The standard is to be applied using a modified retrospective transition.

~~Effective Date for TVA~~

~~The new standard is effective for TVA's interim and annual reporting periods beginning October 1, 2019.~~

~~Effect on the Financial Statements or Other Significant Matters~~

TVA has completed its evaluation of the impact of adopting this guidance and the changes on its consolidated financial statements and related disclosures. The standard is expected to impact financial position as adoption will increase the amount of assets and liabilities recognized on TVA's Consolidated Balance Sheets approximately $200 million each. The standard is not expected to have a material impact on results of operations or cash flows as expense recognition is intended to be substantially the same as the existing standard.

~~TVA has elected to apply the following practical expedients:~~

~~Practical Expedient~~

~~Description~~

~~Package of transition practical expedients (for leases commenced prior to adoption date; expedients must be adopted as a package)~~

Do not need to 1) reassess whether any expired or existing contracts are leases or contain leases, 2) reassess the lease classification for any expired or existing leases, and 3) reassess initial direct costs for any existing leases.

~~Short-term lease expedient (elect by class of underlying asset)~~

~~Elect as an accounting policy to not apply the recognition requirements to short-term leases by asset class.~~

~~Existing and expired land easements not previously accounted for as leases~~

~~Elect to not evaluate existing or expired easements under the new guidance and carry forward current accounting treatment.~~

~~Comparative reporting requirements for initial adoption~~

Elect to apply transition requirements at adoption date, recognize cumulative effect adjustment to retained earnings in period of adoption, and not apply the new requirements to comparative periods, including disclosures.

~~Derivatives and Hedging - Improvements to Accounting for Hedging Activities~~

~~Description~~

This guidance better aligns an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.

~~Effective Date for TVA~~

~~The new standard is effective for TVA's interim and annual reporting periods beginning October 1, 2019.~~

~~Effect on the Financial Statements or Other Significant Matters~~

~~TVA does not expect the adoption of this standard to have a material impact on TVA's financial condition, results of operations, or cash flows.~~

~~Customer's Accounting for Implementation Costs in a Cloud Arrangement That Is a Service Contract~~

~~Description~~

This guidance relates to the accounting for a customer's implementation costs in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing those implementation costs with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The amendments also provide requirements for the classification of the capitalized costs and related expense and cash flows in the financial statements, the application of impairment guidance to the capitalized costs, and the application of abandonment guidance to the capitalized costs. Entities are required to apply the amendments either retrospectively or prospectively to all implementation costs incurred after the adoption date.

~~Effective Date for TVA~~

The new standard is effective for TVA's interim and annual reporting periods beginning October 1, 2020. Early adoption is permitted, and TVA plans to adopt this standard October 1, 2019, on a prospective basis.

~~Effect on the Financial Statements or Other Significant Matters~~

~~TVA does not expect any material impact on TVA's financial condition, results of operations, or cash flows after the adoption of this standard.~~

Financial Instruments - Credit Losses

Description

This guidance eliminates the probable initial recognition threshold in current GAAP and, instead, requires an allowance to be recorded for all expected credit losses for certain financial assets that are not measured at fair value. The allowance for credit losses is based on historical information, current conditions, and reasonable and supportable forecasts. The new standard also makes revisions to the other than temporary impairment model for available-for-sale debt securities. Disclosures of credit quality indicators in relation to the amortized cost of financing receivables are further disaggregated by year of origination. The standard also provides a transition relief that is optional for all entities. It provides entities an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments.

Effective Date for TVA

~~The new standard is effective for TVA's interim and annual reporting periods beginning~~ October 1, ~~2020. While early adoption is permitted, TVA does not plan to adopt the standard early.~~2020

Effect on the Financial Statements or Other Significant Matters

TVA ~~is evaluating the potential~~adopted this standard on a modified retrospective method through a cumulative-effect adjustment to retained earnings on October 1, 2020. TVA recorded an initial transition adjustment of $4 million to retained earnings. The adoption of this standard did not materially impact TVA's financial condition, results of ~~these changes on its consolidated financial statements and related disclosures.~~operations, or cash flows.

Fair Value Measurement Disclosure

Description

~~The~~This guidance changes certain disclosure requirements for fair value measurements. It removes certain disclosure requirements, such as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of the transfers between levels; and the valuation processes for Level 3 fair value measurements. Some disclosure requirements are added, such as the change in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

Effective Date for TVA

~~The new standard is effective for TVA's interim and annual reporting periods beginning~~ October 1, ~~2020. While early adoption is permitted, TVA does not plan to adopt the standard early.~~2020

Effect on the Financial Statements or Other Significant Matters

Adoption of this standard did not have a material impact on TVA's financial condition, results of operations, or cash flows.

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The following accounting standards have been issued but as of September 30, 2021, were not effective and had not been adopted by TVA:


Reference Rate Reform
Description			This guidance provides temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rates.
Effective Date for TVA			The new standard is effective for adoption at any time between March 12, 2020, and December 31, 2022.
Effect on the Financial Statements or Other Significant Matters			TVA continues to review this standard and evaluate the impact of using an alternative reference rate instead of LIBOR in its interest rate swap contracts. TVA does not expect the adoption of this standard to have a material impact on its financial condition, results of operations, or cash flows.


Lessor-Certain Leases with Variable Lease Payments
Description			This guidance amends the lessor lease classification for leases that have variable lease payments that are not based on an index or rate. If the lease meets the criteria for classification as either (1) a sale-type or (2) direct finance lease, and application of the lease guidance would result in recognition of a day-one selling loss, then the lease should be classified as an operating lease. There are two transition methods provided by the guidance for entities that have adopted the standard: •Retrospective application to leases that commenced or were modified after the beginning of the period in which the standard was adopted, or •Prospective application to leases that commence or are modified subsequent to the date that amendments in the guidance are first applied.
Effective Date for TVA			This new standard is effective for TVA's interim and annual reporting periods beginning October 1, 2022. Early adoption is permitted, and TVA adopted this standard on October 1, 2021, on a prospective basis.
Effect on the Financial Statements or Other Significant Matters			Adoption of this standard did not have a material impact on TVA's financial condition, results of operations, or cash flows. ~~TVA is evaluating the potential impact on related disclosures.~~

~~Defined Benefit Plans - Disclosure Requirements~~
~~Description~~			This guidance applies to all employers that sponsor defined benefit pension or other post-retirement plans and modifies or clarifies the disclosure requirements for those plans. The amendments in this update remove disclosures that no longer are considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. Entities are required to apply the amendments retrospectively.
~~Effective Date for TVA~~			~~The new standard is effective for TVA's annual reporting periods beginning October 1, 2021. While early adoption is permitted, TVA does not plan to adopt the standard early.~~
~~Effect on the Financial Statements or Other Significant Matters~~			~~TVA is evaluating the potential impact of these changes on its consolidated financial statements and related disclosures.~~

3. Accounts Receivable, Net

Accounts receivable primarily consist of amounts due from customers for power sales. The table below summarizes the types and amounts of TVA's accounts receivable:


Accounts Receivable, Net At September 30	Accounts Receivable, Net At September 30				Accounts Receivable, Net At September 30
	2019		2018			2021		2020
Power receivables	$	1,624	$	1,570	Power receivables	$	1,480	$	1,401
Other receivables	115		87		Other receivables	86		128

Accounts receivable, net⁽¹⁾	$	1,739	$	1,657	Accounts receivable, net(1)	$	1,566	$	1,529

Note

(1) Allowance for uncollectible accounts was less than $1 million at September 30, ~~2019~~2021 and ~~2018,~~2020, and therefore is not represented in the table above. The allowance at September 30, 2021 includes the impact from adopting CECL on October 1, 2020.

In response to the COVID-19 pandemic, the TVA Board approved the Public Power Support and Stabilization program in 2020. Through this program, TVA offered up to $1.0 billion of credit support to local power company customers ("LPCs") that demonstrated the need for temporary financial relief, through the deferral of a portion of LPCs' wholesale power payments owed to TVA. The program ended on December 31, 2020, with a total of $1 million of credit support approved under the program. The $1 million was fully repaid in the second quarter of 2021.

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4. Inventories, Net

The table below summarizes the types and amounts of TVA's inventories:


Inventories, Net At September 30
	2021		2020
Materials and supplies inventory	$	775	$	770
Fuel inventory	198		253
Renewable energy certificates inventory, net	12		15
Allowance for inventory obsolescence	(35)		(35)
Inventories, net	$	950	$	1,003

5. Other Current Assets

Inventories, Net
At September 30
2019 2018
Materials and supplies inventory $ 742
$ 725
Fuel inventory 294
266
RECs/Emission allowance inventory, net 16
14
Allowance for inventory obsolescence (53 ) (44 )
Inventories, net $ 999
$ 961

Other current assets consisted of the following:


Other Current Assets At September 30
	2021		2020
Commodity contract derivative assets	$	210	$	26
Other	77		58
Other current assets	$	287	$	84

5.Commodity Contract Derivative Assets. TVA enters into certain derivative contracts for natural gas that require physical delivery of the contracted quantity of the commodity. SeeNote 16 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity Derivatives for adiscussion of TVA's commodity contract derivatives.

6. Net Completed Plant

Net completed plant consisted of the following:


Net Completed Plant At September 30
	2021						2020
	Cost		Accumulated Depreciation		Net		Cost		Accumulated Depreciation		Net
Coal-fired(1)(2)	$	19,319	$	14,357	$	4,962	$	18,613	$	13,944	$	4,669
Gas and oil-fired	6,076		1,824		4,252		6,010		1,696		4,314
Nuclear	26,024		12,632		13,392		25,741		12,141		13,600
Transmission	8,597		3,215		5,382		8,283		3,140		5,143
Hydroelectric	3,525		1,135		2,390		3,410		1,090		2,320
Other electrical plant	1,940		1,101		839		1,981		1,146		835
Intangible software	3		2		1		3		2		1
Multipurpose dams	900		388		512		900		381		519
Other stewardship	27		9		18		29		10		19

Total	$	66,411	$	34,663	$	31,748	$	64,970	$	33,550	$	31,420

Net Completed Plant
At September 30
2019 2018
Cost Accumulated Depreciation

Net
Cost Accumulated Depreciation Net
Coal-fired⁽¹⁾
$ 17,400
$ 12,538
$ 4,862
$ 16,482
$ 11,033
$ 5,449
Gas and oil-fired 6,054
1,562
4,492
5,990
1,459
4,531
Nuclear 25,543
11,656
13,887
25,227
11,310
13,917
Transmission 7,932
3,083
4,849
7,515
3,038
4,477
Hydroelectric 3,163
1,051
2,112
3,087
1,012
2,075
Other electrical plant 1,920
1,110
810
1,881
1,107
774
Intangible software 3
1
2
3
—
3
Multipurpose dams 900
373
527
900
367
533
Other stewardship 29
10
19
29
9
20
Total $ 62,944

$ 31,384

$ 31,560
$ 61,114

$ 29,335

$ 31,779
Notes

~~Note~~

(1) TVA recognized accelerated depreciation as a result of the decision to idle or retire certain units. See Note 6 7 — Plant Closures.

(2) In 2020, TVA recorded approximately $1.1 billion in upward revisions to asset retirement costs for coal-fired assets. See Note 13 —Asset Retirement Obligations.

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7. Plant Closures

Background

TVA must continuously evaluate all generating assets to ensure an ~~optimum~~optimal energy portfolio that provides safe, clean, and reliable power while maintaining flexibility and fiscal responsibility to the people of the Tennessee Valley. ~~During its August 2018 meeting,~~Based on results of assessments presented to the TVA Board ~~approved a plan to perform assessments~~in 2019, the retirement of ~~Bull Run Fossil Plant ("Bull Run") and~~ Paradise Fossil Plant ("Paradise"). These assessments included resiliency studies for fuel and transmission and financial considerations. TVA also prepared Environmental Assessments ("EAs") pursuant to the National Environmental Policy Act ("NEPA"). Results of these assessments were presented to the TVA Board at its February 2019 meeting, and the Board approved the retirement of Paradise Unit 3 by December 2020 and Bull Run Fossil Plant ("Bull Run") by December ~~2023.~~2023 was approved. Subsequent to the TVA Board approval, TVA determined that Paradise would not be restarted after January 2020 due to the plant's material condition. Paradise Unit 3 was taken offline on February 1, 2020, effectively retiring the plant. In addition, TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035, and that evaluation includes environmental review, public input, and TVA Board approval.

Financial Impact

As a result of TVA's decision to accelerate the retirements of Paradise and Bull Run, certain construction projects at these locations were identified as probable of abandonment or were no longer expected to be in service for greater than one year prior to the plants' retirement dates. The write-off of these projects resulted in $4 million, $11 million, and $151 million of Operating and maintenance expense during the ~~year~~years ended September 30, ~~2019.~~2021, 2020, and 2019, respectively. TVA also recognized losses of $2 million and $19 million in Operating and maintenance expense related to additional materials and supplies inventory reserves and write-offs identified at Paradise during the years ended September 30, 2020 and 2019, respectively. Losses recognized during the year ended September 30, ~~2019.~~2021, were less than $1 million.

TVA's policy is to adjust depreciation rates to reflect the most current assumptions, ensuring units will be fully depreciated by the applicable retirement dates. As a result of TVA's decision to accelerate the retirement of Paradise and Bull Run, TVA has recognized ~~an additional~~a cumulative $1.1 billion of accelerated depreciation. Of this amount, $136 million, $387 million, and $566 million were recognized for the years ended September 30, 2021, 2020, and 2019, respectively.

8. Leases

The following table provides information regarding the presentation of ~~accelerated depreciation~~leases on the Consolidated Balance Sheets:


Amounts Recognized on TVA's Consolidated Balance Sheets At September 30
		2021		2020
Assets
Operating	Operating lease assets, net of amortization	$	165	$	232
Finance	Finance leases	692		516
Total lease assets		$	857	$	748

Liabilities
Current
Operating	Accounts payable and accrued liabilities	$	40	$	63
Finance	Accounts payable and accrued liabilities	60		41
Non-current
Operating	Other long-term liabilities	122		171
Finance	Finance lease liabilities	687		525
Total lease liabilities		$	909	$	800

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TVA's leases consist primarily of railcars, equipment, real estate/land, power generating facilities, and gas pipelines. TVA's leases have various terms and expiration dates remaining from less than one year to approximately 25 years. The components of lease costs were as follows:


Lease Costs For the years ended September 30 (in millions)
	2021		2020
Operating lease costs(1)	$	52	$	84
Variable lease costs(1)	75		75
Short-term lease costs(1)	12		7
Finance lease costs
Amortization of lease assets(2)	51		15
Interest on lease liabilities(3)(4)	39		33
Total finance lease costs	90		48
Total lease costs	$	229	$	214

Notes

(1) Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations. TVA's rental expense for operating leases was approximately $97 million for the year ended September 30, 2019.

(2) Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations.

(3) Expense is included in Interest expense on the Consolidated Statements of Operations.

7.(4) Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense.

TVA's variable lease costs are primarily related to renewable energy purchase agreements that require TVA to purchase all output from the underlying facility. Payments under those agreements are solely based on the actual output over the lease term. Certain TVA lease agreements contain renewal options. Those renewal options that are reasonably certain to be exercised are included in the lease measurements.

The following table contains additional information with respect to cash and non-cash activities related to leases:


Amounts Recognized on TVA's Consolidated Statements of Cash Flows For the years ended September 30 (in millions)
	2021		2020
Operating cash flows for operating leases	$	53	$	85
Operating cash flows for finance leases	39		33
Financing cash flows for finance leases	52		15

Lease assets obtained in exchange for lease obligations (non-cash)
Operating leases(1)	$	(22)	$	110
Finance leases	233		394

Note

(1) Amount for 2021 represents a non-cash reduction due to a lease that was amended during the fiscal year resulting in derecognition of the operating lease asset and obligation upon remeasurement. Amount for 2020 excludes operating lease assets recorded as a result of the adoption of the new lease standard.

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TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement. This resulted in an interest rate that was higher than TVA's incremental borrowing rate. The weighted average remaining lease term in years and the weighted average discount rate for TVA's operating and financing leases were as follows:


Weighted Averages At September 30
	2021	2020
Weighted average remaining lease terms
Operating leases	5 years	5 years
Finance leases	12 years	12 years

Weighted average discount rate(1)
Operating leases	1.5%	1.6%
Finance leases	17.7%	21.8%

Note

(1) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. If the rate used by the lessor is not readily determinable, TVA uses its incremental borrowing rate as permitted by accounting guidance. The incremental borrowing rate is influenced by TVA's credit rating and lease term and as such may differ for individual leases, embedded leases, or portfolios of leased assets.

The following table presents maturities of lease liabilities and a reconciliation of the undiscounted cash flows to lease liabilities at September 30, 2021:


Future Minimum Lease Payments Minimum Payments Due at September 30, 2021
Operating leases
2022	$	42
2023	40
2024	37
2025	34
2026	10
Thereafter	5
Minimum annual payments	168
Less: present value discount	(6)
Operating present value of net minimum lease payments	$	162

Finance leases
2022	$	115
2023	112
2024	107
2025	106
2026	105
Thereafter	656
Minimum annual payments	1,201
Less: amount representing interest	(454)
Finance present value of net minimum lease payments	$	747

TVA has entered into five PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems. The systems are considered a lease component in these agreements. These PPAs have terms of 20 years, and are expected to commence between October 2022 and December 2024. Payments made over the term of these PPAs are expected to total approximately $413 million.

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9. Other Long-Term Assets

The table below summarizes the types and amounts of TVA's other long-term assets:


Other Long-Term Assets At September 30
	2021		2020(1)
Loans and other long-term receivables, net	$	96	$	100
EnergyRight® receivables, net	57		69
Prepaid long-term service agreements	44		42
Commodity contract derivative assets	40		23


Other	83		91
Total other long-term assets	$	320	$	325

Other Long-Term Assets
At September 30
2019 2018
EnergyRight^®loans receivable
$ 81
$ 90
Loans and other long-term receivables, net⁽¹⁾
125
125
Commodity contract derivative assets⁽²⁾
—
31
Restricted cash and cash equivalents⁽¹⁾
23
23
Prepaid capacity payments 19
27
Other 77
66
Total other long-term assets $ 325
$ 362

~~Notes~~Note

(1) At September 30, ~~2018, $13 million and $10~~2020, $21 million previously classified as ~~Restricted cash and cash equivalents and Loans and other long-term receivables, net (a component of Other long-term assets), respectively, have been reclassified to~~ Restricted cash and cash equivalents (a component of Other long-term assets). and $11 million previously classified as Prepaid capacity payments (a component of Other long-term assets) have been reclassified to Other (a component of Other long-term assets) to conform with current year presentation.

~~(2) In 2019, these~~

Loans and Other Long-Term Receivables. TVA's loans and other long-term receivables primarily consist of economic development loans for qualifying organizations and a receivable for reimbursements to recover the cost of providing long-term, on-site storage for spent nuclear fuel. The current and long-term portions of the loans receivable are reported in Accounts receivable, net and Other long-term assets, ~~are less than $1~~respectively, on TVA's Consolidated Balance Sheets. At September 30, 2021 and 2020, the carrying amount of the loans receivable, net of discount, reported in Accounts receivable, net was approximately $3 million and ~~therefore are not represented in the table above.~~$5 million, respectively.

EnergyRight® Receivables. In association with the EnergyRight^® ~~Solutions~~ program, TVA's LPCs offer financing to end-use customers for the purchase of energy-efficient equipment. Depending on the nature of the energy-efficiency project, loans may have a maximum term of five years or 10 years. TVA purchases the resulting loans receivable from its LPCs. The loans receivable are then transferred to a third-party bank with which TVA has agreed to repay in full any loans receivable that ~~has~~have been in default for 180 days or more or that TVA has determined isare uncollectible. Given this continuing involvement, TVA accounts for the transfer of the loans receivable as secured borrowings. The current and long-term portions of the loans receivable are reported in Accounts receivable, net and Other long-term assets, respectively, on TVA's Consolidated Balance Sheets. At September 30, ~~2019~~2021 and ~~2018,~~2020, the carrying amount of the loans receivable, net of discount, reported in Accounts receivable, net was approximately ~~$20~~$15 million and ~~$22~~$18 million, respectively. See Note 11 12 — Other Long-Term Liabilities for information regarding the associated financing obligation.

8.In response to the COVID-19 pandemic, customers experiencing financial hardship could request a deferral of EnergyRight® loan payments for a period of up to six months. The deferral option began in April 2020 and ended October 31, 2020. All EnergyRight® loans approved for the deferral period resumed payments in the second quarter of 2021. The deferred loans did not accrue interest during the deferral months and totaled less than $1 million.

Allowance for Loan Losses. As described in Note 2 — Impact of New Accounting Standards and Interpretations, TVA adopted CECL on October 1, 2020, to determine its allowance for loan loss. The allowance for loan loss is an estimate of expected credit losses, measured over the estimated life of the loan receivables, that considers reasonable and supportable forecasts of future economic conditions in addition to information about historical experience and current conditions. See Note 1 — Summary of Significant Accounting Policies — Allowance for Uncollectible Accounts.

The allowance components, which consist of a collective allowance and specific loans allowance, are based on the risk characteristics of TVA's loans. Loans that share similar risk characteristics are evaluated on a collective basis in measuring credit losses, while loans that do not share similar risk characteristics with other loans are evaluated on an individual basis.


Allowance Components At September 30, 2021 (in millions)
EnergyRight® loan reserve	$	1
Economic development loan collective reserve	1
Economic development loan specific loan reserve	2

Total allowance for loan losses	$	4

Prepaid Long-Term Service Agreements. TVA has entered into various long-term service agreements for major

maintenance activities at certain of its combined cycle plants. TVA uses the direct expense method of accounting for these

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arrangements. TVA accrues for parts when it takes ownership and for contractor services when they are rendered. Under

certain of these agreements, payments made exceed the value of parts received and services rendered. The current and long-term portions of the resulting prepayments are reported in Other current assets and Other long-term assets, respectively, on

TVA's Consolidated Balance Sheets. At September 30, 2021 and 2020, prepayments of $12 million and $3 million,

respectively, were recorded in Other current assets.

Commodity Contract Derivative Assets. TVA enters into certain derivative contracts for natural gas that require physical delivery of the contracted quantity of the commodity. SeeNote 16 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity Derivatives for adiscussion of TVA's commodity contract derivatives.

10. Regulatory Assets and Liabilities

Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities generally represent obligations to make refunds to customers for previous collections for costs that are not likely to be incurred or deferral of gains that will be credited to customers in future periods. Components of regulatory assets and regulatory liabilities are summarized in the table below.


Regulatory Assets and Liabilities At September 30
	2021		2020
Current regulatory assets
Unrealized losses on interest rate derivatives	$	114	$	114
Unrealized losses on commodity derivatives	3		4




Fuel cost adjustment receivable	79		12

Total current regulatory assets	196		130

Non-current regulatory assets
Deferred pension costs and other post-retirement benefits costs	3,668		5,193
Non-nuclear decommissioning costs	2,653		2,512
Unrealized losses on interest rate derivatives	1,122		1,506
Nuclear decommissioning costs	363		896





Other non-current regulatory assets	150		138
Total non-current regulatory assets	7,956		10,245
Total regulatory assets	$	8,152	$	10,375

Current regulatory liabilities
Fuel cost adjustment tax equivalents	$	130	$	115

Unrealized gains on commodity derivatives	210		26
Total current regulatory liabilities	340		141

Non-current regulatory liabilities

Unrealized gains on commodity derivatives	40		23
Total non-current regulatory liabilities	40		23
Total regulatory liabilities	$	380	$	164

Regulatory Assets and Liabilities
At September 30
2019 2018
Current regulatory assets
Unrealized losses on interest rate derivatives $ 89
$ 73
Unrealized losses on commodity derivatives 39
4
Environmental agreements —
3
Gallatin coal combustion residual facilities —
38
Environmental cleanup costs - Kingston ash spill —
266
Fuel cost adjustment receivable 28
30
Total current regulatory assets 156
414

Non-current regulatory assets

Deferred pension costs and other post-retirement benefits costs 4,756
3,119
Non-nuclear decommissioning costs 1,741
1,019
Unrealized losses on interest rate derivatives 1,241
692
Nuclear decommissioning costs 868
784
Unrealized losses on commodity derivatives 15
8
Environmental agreements 12
11
Gallatin coal combustion residual facilities —
861
Other non-current regulatory assets 130
118
Total non-current regulatory assets 8,763
6,612
Total regulatory assets $ 8,919
$ 7,026

Current regulatory liabilities

Fuel cost adjustment tax equivalents $ 138
$ 146
Unrealized gains on commodity derivatives 12
41
Total current regulatory liabilities 150
187

Non-current regulatory liabilities

Deferred other post-retirement benefits cost —
73
Unrealized gains on commodity derivatives —
31
Total non-current regulatory liabilities —
104
Total regulatory liabilities $ 150
$ 291

In 2017, the TVA Board authorized management to accelerate amortization of certain regulatory assets to the extent actual net income in 2018 exceeded the budgeted amount, up to the aggregate amount of those certain regulatory assets. Assets included in this TVA Board action include: deferred nuclear generating units, environmental cleanup costs related to the Kingston ash spill, and nuclear training costs related to the refurbishing and restarting of Browns Ferry Unit 1 and the construction of Watts Bar Unit 2. TVA recorded $857 million of accelerated amortization of the Deferred nuclear generating units and Nuclear training costs regulatory assets in 2018. The TVA Board authorized TVA to use the amount included in the 2019 rate action for these two regulatory assets, to the extent needed, to accelerate amortization of the Environmental cleanup costs - Kingston ash spill regulatory asset in 2019. TVA recorded $266 million of accelerated recovery for the Kingston ash spill regulatory asset in 2019.

Deferred Pension Costsand Other Post-retirement Benefit Costs. TVA measures the funded status of its pension and post-retirement ("OPEB") benefit plans at each year-end balance sheet date. The funded status is measured as the difference between the fair value of plan assets and the benefit obligations at the measurement date for each plan. The changes in funded status are actuarial gains and losses that are recognized on TVA's Consolidated Balance Sheets by adjusting the recognized

pension and OPEB liabilities, with the offset deferred as a regulatory asset or a regulatory liability. In an unregulated environment, these deferred costs would be recognized as an increase or decrease to accumulated other comprehensive income (loss) ("AOCI").

~~"Incurred~~ "Incurred cost" is a cost arising from cash paid out or an obligation to pay for an acquired asset or service, and a loss from any cause that has been sustained and for which payment has been or must be made. In the cases of pension and OPEB

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costs, the unfunded obligation represents a projected liability to the employee for services rendered, and thus it meets the definition of an incurred cost. Therefore, amounts that otherwise would be charged to AOCI for these costs are recorded as a regulatory asset or liability since TVA has historically recovered pension and OPEB expense in rates. Through historical and current year expense included in ratemaking, the TVA Board has demonstrated the ability and intent to include pension and OPEB costs in allowable costs and in rates for ratemaking purposes. As a result, it is probable that future revenue will result from inclusion of the pension and OPEB regulatory assets or regulatory liability in allowable costs for ratemaking purposes.

The regulatory asset and liability are classified as long-term, which is consistent with the pension and OPEB liabilities, and are not amortized to the consolidated statements of operations over a specified recovery period. They are adjusted either upward or downward each year in conjunction with the adjustments to the unfunded pension liability and OPEB liability, as calculated by the actuaries. Ultimately the regulatory asset and liability will be recognized in the consolidated statements of operations in the form of pension and OPEB expense as the actuarial liabilities are eliminated in future periods. See Note 2122 — Benefit Plans — Obligations and Funded Status.

Additionally on October 1, 2014, TVA began recognizing pension costs as a regulatory asset to the extent that the amount calculated under GAAP as pension expense differs from the amount TVA contributes to the pension plan. As a result of ~~recent~~previous plan design changes, future contributions are expected to exceed the expense calculated under U.S. GAAP. Accordingly, TVA will discontinue this regulatory accounting practice once all such deferred costs have been recovered, at which time it will recognize pension costs in accordance with U.S. GAAP.

Non-Nuclear Decommissioning Costs. Non-nuclear decommissioning costs include: (1) certain deferred charges related to the future closure and decommissioning of TVA's non-nuclear long-lived assets, (2) recognition of changes in the liability, (3) recognition of changes in the value of TVA's ART, and (4) certain other deferred charges under the accounting rules for AROs. TVA has established the ART to more effectively segregate, manage, and invest funds to help meet future non-nuclear AROs. The funds from the ART may be used, among other things, to pay the costs related to the future closure and retirement of non-nuclear long-lived assets under various legal requirements. These future costs can be funded through a combination of investment funds ~~already~~ set aside in the ART, future earnings on those investment funds, and future cash contributions to the ~~ART and future earnings thereon. For 2019,~~ART. In 2021, TVA recovered in rates ~~a portion~~an amount determined by the average life of ~~its estimated current year~~debt financed for non-nuclear decommissioning ~~costs~~expenditures, assuming a 20-year debt service period, and contributions to the ART. Deferred charges will be recovered in rates based on an analysis of the expected expenditures, contributions, and investment earnings required to recover the decommissioning costs. ~~There~~Recovery of future decommissioning costs is ~~not a specified recovery period; therefore,~~dependent upon the future earnings of the ART, timing of decommissioning activities, and changes in decommissioning estimates. The regulatory asset is classified as long-term ~~consistent with~~as amounts recovered are used to service debt or to contribute to the ART, ~~investments and ARO liability.~~which is restricted for future decommissioning costs.

Unrealized Losses on Interest Rate Derivatives. TVA uses regulatory accounting treatment to defer the unrealized gains and losses on certain interest rate derivative contracts. When amounts in these contracts are realized, the resulting gains or losses are included in the ratemaking formula. The unrealized losses on these interest rate derivatives are recorded on TVA's Consolidated Balance Sheets as current and non-current regulatory assets, and the related realized gains or losses, if any, are recorded on TVA's Consolidated Statements of Operations when the contracts settle. A portion of certain unrealized gains and losses will be amortized into earnings over the remaining lives of the contracts. Gains and losses on interest rate derivatives that are expected to be realized within the next year are included as a current regulatory asset or liability on TVA's Consolidated Balance Sheet.

Due to changing interest rates in the financial markets associated with the COVID-19 pandemic, TVA experienced unrealized losses related to its derivative instruments for the year ended September 30, 2020. TVA does not recognize unrealized gains and losses from the investment portfolios and derivative instruments within earnings but rather defers all such gains and losses within a regulatory liability or asset in accordance with its accounting policy. See Note 16 — Risk Management Activities and Derivative Transactions and Note 17 — Fair Value Measurements.

Nuclear Decommissioning Costs. Nuclear decommissioning costs include: (1) certain deferred charges related to the future closure and decommissioning of TVA's nuclear generating units under the Nuclear Regulatory Commission ("NRC") requirements, (2) recognition of changes in the liability, (3) recognition of changes in the value of TVA's NDT, and (4) certain other deferred charges under the accounting rules for AROs. These future costs ~~will~~can be funded through a combination of investment funds set aside in the NDT and ART and future earnings on ~~the NDT, and, if necessary, additional~~those investment funds. For 2021, TVA ~~cash~~recovered in rates a portion of the contributions to the ~~NDT~~ART that are expected to settle liabilities included in the nuclear ARO. Deferred charges will be recovered in rates based on the analysis of expected expenditures, contributions, and ~~future~~investment earnings ~~thereon.~~required to recover the decommissioning costs. See Note 1 — Summary of Significant Accounting Policies — Investment Funds. ~~There~~Recovery of future decommissioning costs is ~~not a specified recovery period; therefore,~~dependent upon the future earnings of the NDT and ART, timing of decommissioning activities, and changes in decommissioning estimates. The regulatory asset is classified as long-term ~~consistent with~~as amounts recovered are contributed to the NDT ~~investments and ARO liability.~~or the ART, which are restricted for future decommissioning costs.

Unrealized Gains (Losses) on Commodity Derivatives. TVA enters into certain derivative contracts for natural gas that require the physical delivery of the contracted quantity of the commodity. Unrealized gains (losses) on ~~coal and~~ natural gas purchase contracts, included as part of unrealized gains (losses) on commodity derivatives, relate to the mark-to-market ("MtM") valuation of ~~coal and~~ natural gas purchase contracts. ~~These~~During the fourth quarter of 2020, TVA discontinued derivative accounting for forward coal contracts because these contracts no longer meet the criteria of net settlement. As a result, the associated net regulatory assets

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were derecognized. The natural gas purchase contracts qualify as derivative contracts but do not qualify for cash flow hedge accounting treatment. As a result, TVA recognizes the changes in the market value of these derivative contracts as a regulatory liability or asset. This treatment reflects TVA's ability and intent to recover the cost of these commodity contracts on a settlement basis for ratemaking purposes through the fuel cost adjustment. TVA recognizes the actual cost of fuel received under these contracts in fuel expense at the time the fuel is used to generate electricity. These contracts expire at various times through ~~2020.~~2024. Unrealized gains and losses on contracts with a maturity of less than one year are included as a current

regulatory asset or liability on TVA's Consolidated Balance Sheets. See Note 15 16 — Risk Management Activities and Derivative Transactions.

~~Environmental Agreements.~~ In conjunction with the Environmental Agreements, TVA recorded certain liabilities totaling $360 million ($290 million investment in energy efficiency projects, demand response projects, renewable energy projects, and other TVA projects; $60 million to be provided to Alabama, Kentucky, North Carolina, and Tennessee to fund environmental projects with preference for projects in the Tennessee River watershed; and $10 million in civil penalties). The TVA Board determined that these costs would be collected in customer rates in the future, and, accordingly, the amounts were deferred as a regulatory asset. Through the end of 2019, $279 million has been paid with respect to environmental projects, $60 million has been paid to Alabama, Kentucky, North Carolina, and Tennessee, and $10 million has been paid with respect to civil penalties. The remaining deferred amounts will be charged to expense and recovered in rates over future periods as payments are made through 2027.

~~Gallatin Coal Combustion Residuals.~~ Based on the August 2017 Order and the assumptions that a new lined facility would be permitted and constructed on the Gallatin site and all existing CCR materials at Gallatin would be moved to this site, TVA estimated the costs of the project to be approximately $900 million, which reflected the expected costs of inflation over the duration of the project but was not discounted to a present value amount given the nature of the obligation. At September 30, 2018, $861 million and $38 million were recorded as long-term and short-term regulatory assets, respectively.

~~As a result of the subsequent decision in TVA's favor by the Sixth Circuit, as well as the June 2019 consent order filed~~

~~in the case brought by TDEC, Gallatin CCR project costs are now recorded in Asset retirement obligations. See Note 12 for additional details.~~

~~Environmental Cleanup Costs – Kingston Ash Spill~~. TVA used regulatory accounting treatment to defer all actual costs incurred and expected future costs related to the Kingston Fossil Plant ("Kingston") Ash Spill. The TVA Board approved a plan to amortize these costs over 15 years beginning on October 1, 2009. Insurance proceeds have been recorded as reductions to the regulatory asset and have reduced amounts collected in future rates. Amounts included as a current regulatory asset on TVA's Consolidated Balance Sheets represent the amount to be amortized in the next 12 months. The TVA Board authorized TVA to use the amount included in the 2019 rate action for the Deferred nuclear generating units and Nuclear training costs regulatory assets, to the extent needed, to accelerate amortization of the Environmental cleanup costs - Kingston ash spill regulatory asset in 2019. The remaining balance at September 30, 2018 was recorded as a current asset, and TVA recorded $266 million of accelerated recovery for the Kingston ash spill regulatory asset in 2019.

Fuel Cost Adjustment Receivable. The fuel cost adjustment provides a mechanism to alter rates monthly to reflect changing fuel and purchased power ~~costs, including realized gains and losses relating to transactions under TVA's Financial Trading Program ("FTP").~~costs. There is typically a lag between the occurrence of a change in fuel and purchased power costs and the reflection of the change in fuel rates. Balances in the fuel cost adjustment regulatory accounts represent over-collected or under-collected revenues that offset fuel and purchased power costs, and the fuel rate is designed to recover or refund the balance in less than one year.

Other Non-Current Regulatory Assets. Other non-current regulatory assets consist of the following:

Deferred ~~Capital Leases~~Lease Asset and Other Financing Obligations. Deferred capital lease and other financing asset costs represent the difference between the FERC's Uniform System of Accounts Prescribed for Public Utilities and Licensees Subject to the Provisions of the Federal Power Act ("Uniform System of Accounts") model balances and the balances under GAAP guidance. Under the Uniform System of Accounts,For certain leases, TVA ~~recognizes~~recognized the initial capital lease and other financing asset and liability at inception of the lease or other ~~obligation; however,~~obligation. However, the annual expense ~~under the Uniform System of Accounts~~recognized in rates is equal to the annual ~~lease or other financing obligation~~ payments, which differs from GAAP treatment. This practice results in TVA's asset balances being higher than they otherwise would have been under GAAP, with the difference representing a regulatory asset related to ~~each capital~~the lease or other financing obligation. These costs will be amortized over the respective lease or other financing obligation terms as ~~lease or other financing obligation~~ payments are made. As the costs associated with this regulatory asset are not currently being considered in rates and the asset is expected to increase over the next year, the regulatory asset has been classified as long-term.

Debt Reacquisition Costs. Reacquisition expenses, call premiums, and other related costs, such as unamortized debt issue costs associated with redeemed Bond issues, are deferred and amortized (accreted) on a straight-line basis over the weighted average life of TVA's debt portfolio. Because timing of additional reacquisition expenses and changes to the weighted average life of the debt are uncertain, the regulatory asset is classified as long-term.

Retirement Removal Costs. Retirement removal costs, net of salvage, that are not legally required are recognized as a regulatory asset. ~~Prior to 2017, net removal costs were amortized over a recovery period consistent with the depreciable lives of related assets under the most recent depreciation study. In 2017 and thereafter, net~~Net removal costs are amortized over a one-year period subsequent to completion of the removal activities. TVA treats this regulatory asset as long-term in its entirety primarily because it relates to assets that are long-term in nature.

Fuel Cost Adjustment Tax Equivalents. The fuel cost adjustment includes a provision related to the current funding of the future payments TVA will make. As TVA records the fuel cost adjustment, five percent of the calculation that relates to a future asset or liability for tax equivalent payments is recorded as a current regulatory liability and paid or refunded in the following year.

~~9. Asset Acquisitions~~

On September 20, 2017, TVA acquired 100 percent of the equity interests in two special purpose entities ("SPEs") designed to administer rent payments TVA makes under certain of its lease/leaseback arrangements. Each entity holds residual interests in four of TVA's peaking combustion turbine units ("CTs"). TVA acquired these entities in order to reacquire the residual interests in eight CTs it had previously granted in the lease/leaseback arrangements.

TVA acquired the entities for total cash consideration of $36 million. The fair value of the assets acquired consisted of $110 million of reacquired rights, and the fair value of liabilities assumed consisted of $74 million in notes payable. Reacquired rights are an intangible asset included in TVA's Completed plant balance and are amortized over the estimated useful life of the underlying CTs. Notes payable assumed in the transaction are included in TVA's Short-term debt and require TVA to make semi-annual payments through May 2020. TVA recognized less than $1 million of amortization expense, related to reacquired rights, within TVA's consolidated statements of operations. Transaction costs were not material.

TVA determined that its lease/leaseback obligations were preexisting relationships that were effectively settled in the asset acquisitions. TVA settled the preexisting relationships separately from the asset acquisitions, resulting in a loss on extinguishment of the obligations of $3 million. The carrying value of lease/leaseback obligations effectively settled was $71 million, including accrued interest, and the reacquisition price was $74 million, paid in cash, at the acquisition date.

~~10.~~11. Variable Interest Entities

A VIE is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of owning a controlling financial interest. When TVA determines that it has a variable interest in a VIE, a qualitative evaluation is performed to assess which interest holders have the power to direct the activities that most significantly impact the economic performance of the entity and have the obligation to absorb losses or receive benefits that could be significant to the entity. The evaluation considers the purpose and design of the business, the risks that the business was designed to create and pass along to other entities, the activities of the business that can be directed and which party can direct them, and the expected relative impact of those activities on the economic performance of the business through its life. TVA has the power to direct the activities of an entity when it has the ability to make key operating and financing decisions, including, but not limited to, capital investment and the issuance of debt. Based on the evaluation of these criteria, TVA has determined it is the primary beneficiary of certain entities and as such is required to account for the VIEs on a consolidated basis.

John Sevier VIEs

In 2012, TVA entered into a $1.0 billion construction management agreement and lease financing arrangement with John Sevier Combined Cycle Generation LLC ("JSCCG") for the completion and lease by TVA of the John Sevier Combined Cycle Facility ("John Sevier CCF"). JSCCG is a special single-purpose limited liability company formed in January 2012 to finance the John Sevier CCF through a $900 million secured note issuance (the "JSCCG notes") and the issuance of $100 million of membership interests subject to mandatory redemption. The membership interests were purchased by John Sevier Holdco LLC ("Holdco"). Holdco is a special single-purpose entity, also formed in January 2012, established to acquire and hold the membership interests in JSCCG. A non-controlling interest in Holdco is held by a ~~third party~~third-party through nominal membership interests, to which none of the income, expenses, and cash flows are allocated.

The membership interests held by Holdco in JSCCG were purchased with proceeds from the issuance of $100 million of secured notes (the "Holdco notes") and are subject to mandatory redemption pursuant to a schedule of amortizing, semi-annual payments due each January 15 and July 15, with a final payment due in January 2042. The payment dates for the

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mandatorily redeemable membership interests are the same as those of the Holdco notes. The sale of the JSCCG notes, the membership interests in JSCCG, and the Holdco notes closed in January 2012. The JSCCG notes are secured by TVA's lease payments, and the Holdco notes are secured by Holdco's investment in, and amounts receivable from, JSCCG. TVA's lease payments to JSCCG are equal to and payable on the same dates as JSCCG's and Holdco's semi-annual debt service payments. In addition to the lease payments, TVA pays administrative and miscellaneous expenses incurred by JSCCG and Holdco. Certain agreements related to this transaction contain default and acceleration provisions.

Due to its participation in the design, business conduct, and credit and financial support of JSCCG and Holdco, TVA

has determined that it has a variable interest in each of these entities. Based on its analysis, TVA has concluded that it is the

primary beneficiary of JSCCG and Holdco and, as such, is required to account for the VIEs on a consolidated basis. Holdco's

membership interests in JSCCG are eliminated in consolidation.

Southaven VIE

In 2013, TVA entered into a $400 million lease financing arrangement with Southaven Combined Cycle Generation LLC ("SCCG") for the lease by TVA of the Southaven Combined Cycle Facility ("Southaven CCF"). SCCG is a special single-purpose limited liability company formed in June 2013 to finance the Southaven CCF through a $360 million secured notes issuance (the "SCCG notes") and the issuance of $40 million of membership interests subject to mandatory redemption. The membership interests were purchased by Southaven Holdco LLC ("SHLLC"). SHLLC is a special single-purpose entity, also formed in June 2013, established to acquire and hold the membership interests in SCCG. A non-controlling interest in SHLLC is held by a ~~third party~~third-party through nominal membership interests, to which none of the income, expenses, and cash flows of SHLLC are allocated.

The membership interests held by SHLLC were purchased with proceeds from the issuance of $40 million of secured notes (the "SHLLC notes") and are subject to mandatory redemption pursuant to a schedule of amortizing, semi-annual payments due each February 15 and August 15, with a final payment due on August 15, 2033. The payment dates for the mandatorily redeemable membership interests are the same as those of the SHLLC notes, and the payment amounts are sufficient to provide returns on, as well as returns of, capital until the investment has been repaid to SHLLC in full. The rate of return on investment to SHLLC is 7.0 percent, which is reflected as interest expense in the consolidated statements of operations. SHLLC is required to pay a pre-determined portion of the return on investment to Seven States Southaven, LLC ("SSSL") on each lease payment date as agreed in SHLLC's formation documents (the "Seven States Return"). The current and long-term portions of the Membership interests of VIE subject to mandatory redemption are included in Accounts payable and accrued liabilities and Other long-term liabilities, respectively.

The payment dates for the mandatorily redeemable membership interests are the same as those of the SHLLC notes. The SCCG notes are secured by TVA's lease payments, and the SHLLC notes are secured by SHLLC's investment in, and amounts receivable from, SCCG. TVA's lease payments to SCCG are payable on the same dates as SCCG's and SHLLC's semi-annual debt service payments and are equal to the sum of (i) the amount of SCCG's semi-annual debt service payments, (ii) the amount of SHLLC's semi-annual debt service payments, and (iii) the amount of the Seven States Return. In addition to the lease payments, TVA pays administrative and miscellaneous expenses incurred by SCCG and SHLLC. Certain agreements related to this transaction contain default and acceleration provisions.

In the event that TVA were to choose to exercise an early buy out feature of the Southaven facility lease, in part or in whole, TVA must pay to SCCG amounts sufficient for SCCG to repay or partially repay on a pro rata basis the membership interests held by SHLLC, including any outstanding investment amount plus accrued but unpaid return. TVA also has the right, at any time and without any early redemption of the other portions of the Southaven facility lease payments due to SCCG, to fully repay SHLLC's investment, upon which repayment SHLLC will transfer the membership interests to a designee of TVA.

TVA participated in the design, business conduct, and financial support of SCCG and has determined that it has a direct variable interest in SCCG resulting from risk associated with the value of the Southaven CCF at the end of the lease term. Based on its analysis, TVA has determined that it is the primary beneficiary of SCCG and, as such, is required to account for the VIE on a consolidated basis.

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Impact on Consolidated Financial Statements

The financial statement items attributable to carrying amounts and classifications of JSCCG, Holdco, and SCCG as of September 30, ~~2019~~2021 and ~~2018,~~2020, as reflected on the Consolidated Balance Sheets, are as follows:


Summary of Impact of VIEs on Consolidated Balance Sheets At September 30
	2021		2020




Current liabilities
Accrued interest	$	10	$	10
Accounts payable and accrued liabilities	3		3
Current maturities of long-term debt of variable interest entities	43		41
Total current liabilities	56		54
Other liabilities
Other long-term liabilities	20		23
Long-term debt, net
Long-term debt of variable interest entities, net	1,006		1,048
Total liabilities	$	1,082	$	1,125

Summary of Impact of VIEs on Consolidated Balance Sheets
At September 30
2019 2018
Current liabilities
Accrued interest $ 11
$ 11
Accounts payable and accrued liabilities 3
2
Current maturities of long-term debt of variable interest entities 39
38
Total current liabilities 53
51
Other liabilities
Other long-term liabilities 25
28
Long-term debt, net
Long-term debt of variable interest entities, net 1,089
1,127
Total liabilities $ 1,167
$ 1,206

Interest expense of ~~$56~~$52 million, ~~$58~~$54 million, and ~~$59~~$56 million related to debt of VIEs and membership interests of variable interest entity subject to mandatory redemption is included inon the ~~consolidated statements~~Consolidated Statements of ~~operations~~Operations for the years ended September 30, ~~2019~~, ~~2018~~,2021, 2020, and ~~2017,~~2019, respectively.

At September 30, 2021, TVA had outstanding debt of VIEs of $1.0 billion and outstanding membership interests subject to mandatory redemption (including current portion) of $23 million issued by one of its VIEs of which it is the primary beneficiary. The following table sets forth TVA's future payments at September 30, 2021:


Maturities Due in the Year Ending September 30
	2022		2023		2024		2025		2026		Thereafter
Long-term debt of VIEs including current maturities(1)	$	43	$	40	$	36	$	37	$	39	$	861
Membership interests of variable interest entity subject to mandatory redemption	3		2		1		1		1		15

Note

(1) Long-term debt of VIEs does not include non-cash item of unamortized debt issue costs of $7 million.

Creditors of the VIEs do not have any recourse to the general credit of TVA. TVA does not have any obligations to provide financial support to the VIEs other than as prescribed in the terms of the agreements related to these transactions.

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12. Other Long-Term Liabilities

Other long-term liabilities consist primarily of liabilities related to certain derivative agreements as well as for environmental remediation liabilities and liabilities under agreements related to compliance with certain environmental regulations. See Note 128 — Leases, Note 13— Asset Retirement Obligations, and Note 1516 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Interest Rate Derivatives~~, and Note 22~~ ~~— Commitments and Contingencies — Legal Proceedings — Environmental Agreements~~. The table below summarizes the types and amounts of Other long-term liabilities:


Other Long-Term Liabilities At September 30	Other Long-Term Liabilities At September 30				Other Long-Term Liabilities At September 30
	2019		2018			2021		2020(1)
Interest rate swap liabilities	$	1,676	$	1,122	Interest rate swap liabilities	$	1,524	$	1,927
Gallatin coal combustion residual facilities liability	—		862
Capital lease obligations	182		178
Operating lease liabilities					Operating lease liabilities	122		171
Currency swap liabilities	193		81		Currency swap liabilities	76		123
EnergyRight® financing obligation	90		102		EnergyRight® financing obligation	66		78
Paradise pipeline financing obligation⁽¹⁾	80		80
Accrued long-term service agreements⁽¹⁾	66		74
Other⁽¹⁾	203		216
Long-term deferred compensation					Long-term deferred compensation	42		38
Long-term deferred revenue					Long-term deferred revenue	42		38
Accrued long-term service agreements					Accrued long-term service agreements	29		56
Other					Other	140		117
Total other long-term liabilities	$	2,490	$	2,715	Total other long-term liabilities	$	2,041	$	2,548

Note

(1) ~~Certain amounts~~At September 30, 2020, $38 million and $38 million previously classified as Other (a component of Other long-term liabilities) have been reclassified to Long-term deferred compensation (a component of Other long-term liabilities) and Long-term deferred revenue (a component of Other long-term liabilities), respectively, to conform with current year presentation.

Interest Rate Swap Liabilities. TVA uses interest rate swaps to fix variable short-term debt to a fixed rate. The values of these derivatives are included in Accounts payable and accrued liabilities, Accrued interest, and Other long-term liabilities on the Consolidated Balance Sheets. ~~As of~~At September 30, ~~2019~~2021 and ~~2018,~~2020, the carrying amount of the interest rate swap liabilities reported in Accounts payable and accrued liabilities and Accrued interest was ~~approximately $88~~$115 million and ~~$77~~$114 million, respectively. See Note 1516 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Interest Rate Derivatives for information regarding the interest rate swap liabilities. As of September 30, ~~2019,~~2021, Interest rate swap liabilities ~~increased $554~~decreased $402 million as compared to September 30, ~~2018,~~2020, primarily due to ~~significant decreases~~an increase in market interest rates ~~used to discount future expected~~along with net ~~cash flows in mark-to-market valuations.~~settlement payments made during the year.

~~Gallatin Coal Combustion Residual Facilities Liability.~~ AsOperating Lease Liabilities. TVA's operating leases consist primarily of railcars, equipment, real estate/land, and power generating facilities. At September 30, ~~2018,~~2021 and 2020, the ~~estimated cost~~current portion of ~~the potential~~

~~Gallatin CCR project was $900 million. The current and long-term portions of the resulting obligation were~~TVA's operating leases reported in Accounts payable and accrued liabilities was $40 million and $63 million, respectively. See Note 8 — Leases for more information regarding leases.

Currency Swap Liabilities. To protect against exchange rate risk related to British pound sterling denominated Bond transactions, TVA entered into foreign currency hedges. The values of these derivatives are included in Accounts payable and accrued liabilities and Other long-term liabilities ~~respectively,~~ on ~~TVA's~~the Consolidated Balance Sheets. ~~As of~~At September 30, ~~2018, related~~2021 and 2020, the carrying amount of the currency swap liabilities ~~of $30 million were recorded~~reported in Accounts payable and accrued ~~liabilities. As a result of the~~

~~subsequent decision in TVA's favor by the Sixth Circuit, as well as the June 2019 consent order filed in the case brought by~~

~~TDEC, Gallatin CCR project costs are now recorded in Asset retirement obligations.~~liabilities was $7 million and $86 million, respectively. See Note 12 16 — ~~Asset Retirement Obligations.~~Risk Management Activities and Derivative Transactions — Cash Flow Hedging Strategy for Currency Swaps for more information regarding the currency swap liabilities.

EnergyRight^®Financing Obligation. TVA purchases certain loans receivable from its LPCs in association with the EnergyRight^® ~~Solutions~~ program. The current and long-term portions of the resulting financing obligation are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheets. ~~As of~~At September 30, ~~2019~~2021 and ~~2018,~~2020, the carrying amount of the financing obligation reported in Accounts payable and accrued liabilities was approximately ~~$23~~$16 million and ~~$25~~$19 million, respectively. See Note 7 9 — Other Long-Term Assets for information regarding the associated loans receivable.

~~Paradise Pipeline Financing Obligation.~~ In response to the COVID-19 pandemic, customers experiencing financial hardship could request a deferral of EnergyRight® loan payments for a period of up to six months. The deferral option began in April 2020 and ended October 31, 2020. All EnergyRight® loans approved for the deferral period resumed payments in the second quarter of 2021. The deferred loans did not accrue interest during the deferral months and totaled less than $1 million.

Long-Term Deferred Compensation. TVA ~~reserves firm pipeline capacity on an approximately 19 mile pipeline~~

~~owned by Texas Gas,~~provides compensation arrangements to engage and retain certain employees, both executive and non-executive, which ~~serves TVA's Paradise CC. The capacity contract contains a lease component~~

~~due~~are designed to ~~TVA's exclusive right~~provide participants with the ability to ~~use the pipeline. TVA accounts for this lease component as a financing transaction.~~defer compensation to future periods. The current

and long-term portions ~~of the resulting financing obligation~~ are reported in Accounts payable and accrued liabilities and Other long-

~~long-term~~

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term liabilities, respectively, on ~~TVA's~~TVA’s Consolidated Balance Sheets. ~~As of both~~At September 30, ~~2019~~2021 and ~~2018,~~

~~related liabilities~~2020, the current amount of ~~less than $1 million were recorded~~deferred compensation reported in Accounts payable and accrued ~~liabilities.~~liabilities was $51 million and $47 million, respectively.

Long-Term Deferred Revenue. Long-term deferred revenue represents payments received that exceed services rendered resulting in the deferral of revenue. This long-term portion represents amounts that will not be recognized within the next 12 months primarily related to fiber and transmission agreements. The current and long-term portions of the deferral are reported in Accounts Payable and accrued liabilities and Other long-term liabilities, respectively, on TVA’s Consolidated Balance Sheets. At September 30, 2021 and 2020, the current amount of deferred revenue was $10 million and $11 million, respectively, and is included in Accounts payable and accrued liabilities.

Accrued Long-Term Service Agreement. TVA has entered into various long-term service agreements for major

maintenance activities at certain of its combined cycle plants. TVA uses the direct expense method of accounting for these

arrangements. TVA accrues for parts when it takes ownership and for contractor services when they are rendered. Under

certain of these agreements, parts received and services rendered exceed payments made. The current and long-term portions

of the resulting obligation are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on

TVA's Consolidated Balance Sheets. ~~As of~~At September 30, ~~2019~~2021 and ~~2018,~~2020, related liabilities of ~~$12~~$28 million and ~~$30~~$15 million, respectively, were recorded in Accounts payable and accrued liabilities.

~~12.~~13. Asset Retirement Obligations

During the year ended September 30, ~~2019,~~2021, TVA's total ARO liability increased ~~$837~~$217 million.

To estimate its decommissioning obligation related to its nuclear generating stations, TVA uses a probability-weighted, discounted cash flow model which, on a unit-by-unit basis, considers multiple outcome scenarios that include significant estimations and assumptions. Those assumptions include (1) estimates of the cost of ~~decommissioning,~~decommissioning; (2) the method of decommissioning and the timing of the related cash ~~flows,~~flows; (3) the license period of the nuclear plant, considering the probability of license ~~extensions,~~extensions; (4) cost escalation ~~factors,~~factors; and (5) the credit adjusted risk free rate to measure the obligation at the present value of the future estimated costs. TVA has ascribed probabilities to two different decommissioning methods related to its nuclear decommissioning obligation estimate: the DECON method and the SAFSTOR method. The DECON method requires radioactive contamination to be removed from a site and safely disposed of or decontaminated to a level that permits the site to be released for unrestricted use shortly after it ceases operation. The SAFSTOR method allows nuclear facilities to be placed and maintained in a condition that allows the facilities to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use.

TVA bases its nuclear decommissioning estimates on site-specific cost studies. ~~The most recent study was approved and implemented in September 2017. An increase of $250 million was recorded to the nuclear AROs as a result of the updates. Site-specific~~These cost studies are updated for each of TVA's nuclear units at least every five years. TVA plans to complete new cost studies for its nuclear units in 2022.

TVA also has decommissioning obligations related to its non-nuclear generating sites, ash impoundments, transmission substation and distribution assets, and certain general facilities. To estimate its decommissioning obligation related to these assets, TVA uses estimations and assumptions for the amounts and timing of future expenditures and makes judgments concerning whether or not such costs are considered a legal obligation. Those assumptions include (1) estimates of the costs of decommissioning, (2) the method of decommissioning and the timing of the related cash flows, (3) the expected retirement date of each asset, (4) cost escalation factors, and (5) the credit adjusted risk free rate to measure the obligation at the present value of the future estimated costs. TVA bases its decommissioning estimates for each asset on its identified preferred closure method.

~~During 2019, the~~The revisions in non-nuclear estimates increased ~~$50~~$191 million for the year ended September 30, ~~2019. As~~2021. This increase was primarily driven by revisions of approximately $122 million to certain coal combustion residuals ("CCR") closure liabilities at Shawnee Fossil Plant ("Shawnee"), Paradise, Colbert Fossil Plant, Cumberland Fossil Plant, and Gallatin Fossil Plant ("Gallatin") resulting from revised engineering estimates for construction costs, new vendor bids, modified closure designs, and expected costs associated with post-closure care of the closed areas. CCR ARO liabilities associated with groundwater well monitoring also increased approximately $69 million due to expansion in the scope of recurring activities including measuring, modeling, and reporting. In addition, TVA's use of a ~~result~~new CCR landfill at Shawnee and expansion of ~~recent experience~~landfill acreage used at Gallatin resulted in ~~completing settlements at certain facilities, costs for asbestos abatement activities across TVA's fossil fleet~~new obligations of $30 million and $13 million, respectively.

The revisions in non-nuclear estimates increased ~~$114 million. TVA changed the preferred closure method~~$1.1 billion for the ~~Allen West Impoundment from closure-in-place~~year ended September 30, 2020. In November 2019, the Tennessee Department of Environment and Conservation ("TDEC") released amendments to ~~closure-by-removal,~~its regulations that govern solid waste disposal facilities, including TVA's active CCR facilities covered by a solid waste disposal permit and those which closed pursuant to a TDEC approved closure plan. Such facilities are generally subject to a 30-year post-closure care period during which the owner or operator must undertake certain activities, including monitoring and maintaining the facility. The amendments, among other things, add an additional 50-year period after the end of the post-closure care period, require TVA to submit recommendations as to what activities must be performed during this 50-year period to protect human health and the environment, and require TVA to submit revised closure plans every 10 years. This regulatory revision resulted in ~~a cost~~an increase of ~~$33~~$129 million, of which $38 million was related to operating CCR facilities and $91 million was related to inactive or closed CCR facilities. In June 2020, based on recent project cost data and estimates, TVA revised its AROs for closure-by-removal of certain

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CCR facilities at Allen Fossil Plant, resulting in an increase to AROs of $273 million. ~~Partially offsetting these~~In September 2020, TVA completed an engineering review of its cost estimates to close the ash pond complex at Gallatin, resulting in an increase of $173 million due to expected cost increases ~~was~~for excavation, disposal, and other activities required in a ~~$57~~closure-by-removal project. Also in September 2020, TVA completed a study of its plant decommissioning obligations and CCR post-closure care and monitoring obligations. TVA increased its plant decommissioning obligations by $19 million, ~~decrease in costs for Paradise closure projects,~~primarily due to asbestos and ~~a $44 million decrease in costs for the Allen East Impoundment closure project. Additionally,~~hazardous material abatement costs. TVA increased its CCR post-closure care and monitoring AROs primarily as a result of ~~the decision in TVA's favor by the Sixth Circuit in the lawsuit brought by TSRA~~expected cost increases to monitor groundwater and ~~TCWN,~~maintain CCR areas after closure as well as ~~the June 2019 consent order filed~~increases in ~~the case brought by TDEC, Gallatin discounted cash flows related~~expected acreage to ~~CCR~~maintain after closure, and post-closure costs of $672 million have been recorded as Asset retirement obligations. The obligation is based upon the assumptions outlined in the consent order, including a new lined facility will be permitted and constructed on the Gallatin site and existing CCR materials in the existing wet ash disposal impoundments at Gallatin will be moved to this new facility over a 20-year period. See Note 22 — ~~Commitments and Contingencies — Legal Proceedings — Lawsuit Brought by TDEC Involving Gallatin Fossil Plant CCR Facilities~~ ~~and~~ ~~Lawsuit Brought by TSRA and TCWN Involving Gallatin Fossil Plant CCR Facilities~~ ~~for additional information.~~totaling $460 million.

Additionally, during the years ended September 30, ~~2019~~2021 and ~~2018,~~2020, both the nuclear and non-nuclear liabilities were increased by periodic accretion, partially offset by settlement projects that were conducted during these periods. The nuclear and non-nuclear accretion amounts were deferred as regulatory assets. During 2021, 2020, and 2019, ~~2018,~~$72 million, $169 million, and ~~2017,~~ $144 million, ~~per year~~respectively, of the related regulatory assets were amortized into expense as these amounts were collected in rates. See Note 8 10 — Regulatory Assets and Liabilities. TVA maintains investment trusts to help fund its decommissioning obligations. See Note 16 17 — Fair Value Measurements — Investment Funds and Note 2223 — Commitments andContingencies — Decommissioning Costs for a discussion of the trusts' objectives and the current balances of the trusts.


Asset Retirement Obligation Activity	Asset Retirement Obligation Activity										Asset Retirement Obligation Activity
	Nuclear			Non-Nuclear			Total					Nuclear		Non-Nuclear		Total
Balance at September 30, 2017	$	2,859		$	1,445		$	4,304
Balance at September 30, 2019											Balance at September 30, 2019	$	3,136	$	2,480	$	5,616
Settlements											Settlements	(1)		(113)		(114)
Revisions in estimate											Revisions in estimate	—		1,077		1,077

Accretion (recorded as regulatory asset)											Accretion (recorded as regulatory asset)	143		63		206

Balance at September 30, 2020											Balance at September 30, 2020	3,278		3,507		6,785		(1)

Settlements	—			(106		)	(106		)		Settlements	(11)		(231)		(242)
Revisions in estimate	—			430			430				Revisions in estimate	12		191		203
Additional obligations	—			1			1				Additional obligations	—		43		43
Accretion (recorded to regulatory asset)	130			35			165
Asset disposition	—			(15		)	(15		)
Balance at September 30, 2018	2,989			1,790			4,779			⁽¹⁾
Settlements	(7		)	(82		)	(89		)
Revisions in estimate	—			50			50
Additional obligations	18			—			18
Gallatin CCR	—			672			672
Accretion (recorded to regulatory asset)	136			50			186
Balance at September 30, 2019	$	3,136		$	2,480		$	5,616		⁽¹⁾

Accretion (recorded as regulatory asset)											Accretion (recorded as regulatory asset)	149		64		213

Balance at September 30, 2021											Balance at September 30, 2021	$	3,428	$	3,574	$	7,002	(1)

~~The following chart outlines the companies that constituted the survey sample and proxy peer group used to benchmark NEO compensation for 2019:~~

Contents



~~Company~~	~~Investor Owned Utilities with Revenue Greater than or Equal to $3 Billion Which Participated in 2018 Willis Towers Watson Energy Services Survey~~	~~Government Entities Which Participated in 2018 Willis Towers Watson Energy Services Survey~~	~~Proxy Peer Group of Investor Owned Utilities~~
~~AES Corp.~~	þ		þ
~~Alliant Energy~~	þ
~~Ameren~~	þ		þ
~~American Electric Power Co., Inc.~~	þ		þ
~~Calpine Corp.~~	þ		þ
~~CenterPoint Energy, Inc.~~	þ		þ
~~CMS Energy Corp.~~	þ		þ
~~Consolidated Edison~~			þ
~~Dominion Energy~~	þ		þ
~~DTE Energy Co.~~			þ
~~Duke Energy Corp.~~	þ		þ
~~Edison International~~	þ		þ
~~Energy Northwest~~		þ
~~Entergy Corp.~~	þ		þ
~~Eversource Energy~~	þ		þ
~~Exelon Corp.~~	þ		þ
~~FirstEnergy Corp.~~	þ		þ
~~JEA~~		þ
~~New York Power Authority~~		þ
~~NextEra Energy, Inc.~~	þ		þ
~~NiSource~~	þ		þ
~~NRG Energy~~	þ		þ
~~Omaha Public Power~~		þ
~~Pacific Gas and Electric Co.~~	þ		þ
~~Pinnacle West Capital~~	þ
~~PPL Corp.~~	þ		þ
~~Public Service Enterprise Group Inc.~~	þ		þ
~~Salt River Project~~		þ
~~SCANA~~	þ
~~Sempra Energy~~	þ		þ
~~Southern Company~~	þ		þ
~~UNS Energy~~	þ
~~Vistra Energy~~	þ
~~WEC Energy~~	þ
~~Xcel Energy~~	þ		þ

~~Executive Compensation Program Components~~

~~The primary compensation program components for 2019 for the NEOs are summarized in the diagram below and are briefly described in the table and the narrative that follow the diagram.~~



~~Primary~~ Compensation ~~Program Components for Named Executive Officers in 2019~~Component And % of Target TDC			Objective		Key Features
~~Compensation Component~~				~~Objective~~	~~Key Features~~
Annual Salary		Provides fixed base level of compensation to executives to encourage hiring and retention of qualified individuals				- •Annual salary is typically determined by reference to median (50th percentile) for similar positions at other companies in TVA's peer ~~group or~~group; above the median (50th to 75th percentile) for positions affected by market scarcity, recruitment and retention issues, and other business reasons; or below median due to incumbent experience, position scope, or other business reasons. - •Typically reviewed annually to consider changes in benchmark salaries and/or exceptional individual merit performances.

~~EAIP~~	Executive Annual Incentive Plan (EAIP)	Incentivizes performance by providing at-risk compensation tied to attainment of pre-established performance goals for the fiscal year				- •Annual incentive payouts are based on the results of ~~established~~enterprise goals ~~of an enterprise scorecard,~~ as determined from year to year by the TVA Board or the CEO, as applicable. Annual incentive payouts may be impacted by a corporate multiplier or adjusted by the TVA Board or CEO, as applicable, based on the evaluation of performance during the year. - •Target annual incentive opportunities increase with position and responsibility and are based in part on the opportunities other companies in TVA's peer group provide to those in similar positions. - •Typically reviewed annually to consider changes in benchmark annual incentives.
Long-Term Incentive Plan (LTIP)
~~LTIP~~		~~Incentivizes performance and retention by providing performance-based and retention-based grants that are tied to a vesting schedule~~		- •Participation is limited to key positions that have the ability to significantly impact the long-term financial and/or operational objectives critical to TVA's overall success. - •LTP awards are granted ~~annually~~ with a three-year vesting cycle. Awards are variable at-risk opportunities based on ~~achieved level~~achievement against performance goals established at the beginning of ~~performance (i.e., scorecard results for~~ the three-year performance ~~period).~~ - period. •The Committee's policy is for a majority of each executive's total long-term incentive opportunity to be in the form of performance-based awards, with the remaining percent to be retention oriented. •LTR awards ~~may be granted annually and~~ will vest and pay out in three equal increments annually over three years, subject to the participant being employed through such dates, but are payable upon death or disability if earlier on a pro-rated basis. •Since TVA issues no equity, TVA offers retention awards to be competitive with the industry marketplace for talent, providing a retention incentive similar to restricted stock or restricted stock units. These grants are intended to encourage executives to remain with TVA and to provide, in combination with salary, EAIP, and LTP grants, a competitive level of TDC.
Long-Term Performance Award (LTP)							Incentivizes performance by providing at-risk compensation tied to attainment of pre-established performance goals over a three-year performance period
~~Retirement Plans~~ ~~(Qualified Plans and SERP)~~ Long-Term Retention Award (LTR)					Provides compensation beginning with retirement or termination of employment (if vesting requirements are satisfied) with enhanced compensation for certain executives to provide an additional incentive for hiring andIncentivizes retention ~~of qualified individuals~~	~~- Broad-based plans available to full-time employees of TVA~~by providing retention-based grants that are ~~qualified under Internal Revenue Service ("IRS") rules and are similar~~tied to ~~the qualified plans provided by other companies in TVA's peer group.~~ ~~- Certain executives in critical positions also participate in~~ a non-qualified pension plan that provides supplemental pension benefits at compensation levels that are higher than the limits specified by IRS regulations for qualified pension plans. These supplemental benefits are comparable to those provided by other companies in TVA's peer group.three-year vesting schedule

Setting Competitive Compensation Amounts and Opportunities Relevant to Labor Market

Salary

~~Salary.~~ Annual salary is considered a "fixed" compensation component. Salary levels are typically reviewed annually to consider changes in benchmark salaries and/or exceptional individual merit performances.

The 2021 salaries for the NEOs are described under each executive's compensation scorecard under 2021 Pay Decisions - 2021 NEO Pay Decisions and Compensation Scorecards below and reported in the Executive Compensation Tables and Narrative Disclosures - Summary Compensation Table.

Incentive Opportunities

The incentive opportunities for the NEOs are set at levels that (i) are competitive with the relevant labor market, with target total direct compensation generally determined by reference to the ~~median (50th percentile)~~50th percentile of the relevant labor market, and (ii) result in a majority of each executive's total long-term incentive opportunity in the form of performance-based awards and the remaining percent of each executive's total long-term incentive opportunity in the form of retention awards.

Long-term incentive awards are intended to provide a similar pay component as equity-based compensation at peer IOUs. Since TVA does not issue equity, the compensation program cannot provide a component similar to equity awards that capture long-term value, reflect the continuing efforts of executives, and have the potential for ~~similar positions at~~significant appreciation. As a result, TVA's long-term incentives are not necessarily intended to match market pay levels.

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Target incentive opportunities increase with position scope and responsibility to hold management accountable for delivery of results and are based in part on the opportunities other companies in TVA's peer group provide to those in similar positions. Incentive opportunities are typically reviewed annually to consider changes in benchmark annual and long-term incentives. The Committee reviews peer benchmark information by position for each component of pay as well as for overall TDC.

Non-Direct Compensation Elements

Other Compensation

In order to recruit high-quality talent, TVA may offer recruitment awards as well as relocation assistance and reimbursement. These types of deferred cash incentive awards are intended to compensate the individuals for amounts they may have forfeited from their previous employer in order to join TVA and/or ~~above~~provide substitute compensation when the ~~median (50th~~individual is not eligible to ~~75th percentile) for positions affected by market scarcity,~~receive certain incentive payments until a future date.

In 2021, Mr. Lyash received the third of three annual installments of a deferred cash recruitment and relocation incentive that was part of his employment offer. The third installment of $292,000 was paid to Mr. Lyash in September 2021.

In 2021, Mr. Fountain received the second of two annual installments of a deferred cash relocation incentive that was part of his employment offer. The second installment of $100,000 was paid to Mr. Fountain in June 2021. Mr. Fountain also received the second of three annual installments of a deferred cash recruitment incentive that was part of his employment offer. The second installment of $350,000 was paid to Mr. Fountain in June 2021.

In 2021, Mr. Moul received the first of three annual installments of a deferred cash recruitment and relocation incentive that was part of his employment offer. The first installment of $650,000 was paid to Mr. Moul in June 2021.

Retirement Benefits

TVA provides its NEOs with retirement benefits through its qualified plans as well as through a non-qualified supplemental executive retirement plan ("SERP") in order to provide compensation beginning with retirement or termination of employment (if vesting requirements are satisfied), with enhanced compensation for certain executives to provide an additional incentive for hiring and retention ~~issues,~~of qualified individuals.

TVA sponsors a qualified defined benefit plan ("pension plan") and a qualified defined contribution plan ("401(k) plan"), which are administered by the TVA Retirement System ("TVARS"). The availability of, and level of benefits provided by, these qualified plans are comparable to similar qualified plans provided by companies in TVA's peer group.

In addition to its qualified retirement plans, TVA has a SERP for selected executives who are critical to the ongoing success of the enterprise. TVA's SERP is a non-qualified plan that provides supplemental pension benefits at compensation levels that are higher than the limits specified by IRS regulations for qualified pension plans. The provision of such non-qualified plans to executives is a common practice among companies in TVA's peer group. The purpose of the SERP is to:

•Provide a competitive retirement benefit level that cannot be delivered solely through TVA's qualified retirement plans due to Internal Revenue Service ("IRS") limitations, and

•Provide a benefit level (as a percentage replacement of pre-retirement pay) that is more comparable to that of employees who are not subject to the IRS limitations.

More information regarding these retirement benefits is found following the Pension Benefits Table.

Health and Other Benefits

TVA offers a group of health and other ~~business reasons. In general, salary is reviewed annually with increases awarded based~~benefits (medical, dental, vision, life and accidental death and disability insurance, and long-term disability insurance) that are available to a broad group of employees. The NEOs are eligible to participate in TVA's health benefit plans and other non-retirement benefit plans on ~~prior year performance,~~ the ~~executive's role~~same terms and ~~responsibilities, and to bring salaries into alignment with~~at the ~~market.~~

~~The salaries of the NEOs for 2019 and 2018 were~~same contribution rates as ~~follows:~~ other TVA employees.

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Executive
2019⁽¹⁾
2018 Percent Change
Mr. Lyash $ 920,000
N/A
N/A
Mr. Johnson 1,150,000
$ 1,050,000
9.5 %
Mr. Thomas 647,169
628,319
3.0 %
Mr. Skaggs⁽²⁾
620,000
520,000
19.2 %
Ms. Quirk 541,059
510,000
6.1 %
Mr. Rausch 520,000
N/A
N/A
2021 Performance Goals and Performance Achievement

~~Note~~

Strategic Priorities

Incentive Compensation Metrics

A significant portion of each NEO's compensation is based on company performance and influenced by individual performance achievements. As a result, a majority of NEO compensation is at-risk, providing incentive for the executive to achieve superior performance for TVA and for the businesses, communities, and residents it serves, both in the short term and in the years to come.

Incentive compensation is provided to NEOs under the EAIP and LTIP. Each incentive award is described below.

People
Advantage

Amplifying the energy, passion and creativity within each TVA employee

Safety- Serious Injury Incident Rate

Operational

Excellence

Building on TVA's best-in-class reputation for reliable service and competitively priced power

External Performance Indicators for the TVA Nuclear Fleet

Nuclear Unit Capability Factor

Combined Cycle Equivalent Availability Factor

Coal Equivalent Availability Factor

Load Not Served

Financial

Strength

Investing in the future, while keeping energy costs as low as possible

Total Financing Obligations

Cash Flow from Operating Activities

Total Spend

Net Income

Non-Fuel Delivered Cost of Power

Powerful

Partnerships

Promoting progress through the shared success of TVA's customers and stakeholders

Jobs Created and Retained

Stakeholder Survey

Customer Survey

Media Tone (awards granted before 2021)

Igniting Innovation

Pursuing innovative solutions for TVA and its customers and communities

~~(1) All 2019 salary changes were effective on October 1, 2018. Mr. Lyash commenced employment with TVA on April 8, 2019 and Mr. Rausch commenced employment with TVA on October 15, 2019.~~

~~(2) Mr. Skaggs was named TVA's~~ Executive ~~Vice President and COO effective October 2018 and received a promotional compensation adjustment.~~

Annual Incentive ~~Compensation.~~ Plan

All TVA employees participate in an annual incentive program (subject to eligibility requirements), since every employee contributes to the success of TVA and the execution of its Public Power mission. While the metrics used for annual incentives are the same for all employees, they are provided under two plans: the WPTIP provides for annual incentive awards for eligible non-executives, and the EAIP provides for annual incentive awards for eligible executives, including the ~~NEOs, participate in the EAIP.~~NEOs. The EAIP is designed to encourage and reward executives for successfully achieving annual financial and operational goals. For ~~2019, an executive's~~2021, each NEO's annual incentive payment ~~under the EAIP~~ was calculated as follows:

EAIP

Amount

Annual

Salary

X×

Annual Target

Incentive

Opportunity

X×

Percent of

Scorecard
Opportunity

Achieved

(0% to 150%)

X×

Corporate

Multiplier

(0 to 1.00)

X×

Individual
Performance
Multiplier

(0% to ~~125%~~150%)

Each component of this calculation is discussed below (except for annual salary, which is discussed above). The award for certain participants in the WPTIP and the EAIP may be adjusted by the participant's supervisor based on an evaluation of the participant's individual achievements and performance during the year. In addition, pursuant to discretion granted under the TVA Compensation Plan, awards may be further adjusted by the TVA Board or the CEO (1) as a result of any unusual or nonrecurring event affecting TVA or the financial statements of TVA or (2) as a result of changes in business conditions or the business strategy of TVA.

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Annual Target Incentive Opportunity~~. Annual incentive opportunities for participants in~~

The TVA Board evaluated the ~~EAIP generally increase with position and responsibility. For 2019, Mr. Lyash's and Mr. Johnson's target~~appropriateness of the EAIP award opportunities ~~were approved at 150 percent of salary. In October 2018, Mr. Johnson~~for the CEO and made no changes for 2021. Similarly, the CEO evaluated the appropriateness of the EAIP award opportunities for the other NEOs (except for Mr. Fountain and Mr. Moul, who were not NEOs at the end of 2020), and made no ~~changes.~~changes for 2021. Accordingly, target EAIP award opportunities of the NEOs for ~~2019~~2021 were as follows:



Named Executive Officers	~~2019~~2021 Target Annual Incentive Opportunity⁽¹⁾
Mr. Lyash	~~150%~~150	%
Mr. ~~Johnson~~Thomas	~~150%~~80	%
Mr. ~~Thomas~~Rausch	~~80%~~70	%
Mr. ~~Skaggs~~Fountain	~~80%~~70	%
~~Ms. Quirk~~Mr. Moul	~~70%~~70	%
Mr. ~~Rausch~~Skaggs	~~70%~~80	%

Note

(1)Represents a percent of each NEO's annual salary.

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~~Percent~~2021 Incentive Plan Performance Metrics

The metrics used to measure performance under the WPTIP and EAIP are the same for all TVA employees. These metrics tie directly to key enterprise metrics used by senior management in its annual budget and strategic planning process, which in turn tie directly to the achievement of ~~Opportunity Achieved. TVA had one~~TVA's strategic objectives and mission. The 2021 WPTIP and EAIP metrics and goals were set out in an organizational scorecard ~~for the 2019 EAIP (TVA~~("TVA Enterprise ~~Scorecard). This scorecard was also used~~Scorecard") applicable to ~~determine annual incentive payouts for~~ all ~~non-executive TVA employees who participated in TVA's 2019 WPTIP.~~

~~Once scorecard results were calculated, the CEO, after consulting~~employees. The 2021 performance measures, along with the TVA Board, approved the scorecard result at 116 percent. The Chair of the TVA Board, in consultation with the Committee and with input from the individual members of the TVA Board, then recommended and approved a payout of 116 percent for the CEO and the retired CEO.

~~The goals and associated weightings for the scorecard and the adjusted results achieved follow:~~

TVA 2019 Enterprise Scorecard
Enterprise Measures Weight Threshold Target Stretch Actual
TVA Total Spending ($ Million)⁽¹⁾
40% $ 4,862
$ 4,725
$ 4,589
$ 4,467
Load Not Served⁽²⁾
30% 4.8
4.0
3.6
3.7
Nuclear Unit Capability Factor ("UCF") (%)⁽³⁾
15% 89.5 % 90.3 % 91.1 % 89.8 %
Combined Cycle Seasonal Equivalent Forced Outage Rate ("EFOR") (%)⁽⁴⁾
10% 3.3 % 2.0 % 1.5 % 7.5 %
Coal Seasonal Equivalent Forced Outage Rate (%)⁽⁵⁾
5% 13.6 % 12.1 % 10.8 % 12.7 %
Scorecard Result 116%

~~Notes~~

~~(1) TVA Total Spending means total non-fuel O&M + total capital expenses for corporate and operational strategic business unit organizations (excludes Board of Directors).~~

(2) Load Not Served ("LNS") is a measure of the magnitude and duration of transmission system outages that affect TVA customers and is expressed in system minutes. LNS events caused by TVA on a distributor system will also count as a TVA event even if the TVA system remains energized. LNS excludes interruptions dueweighting ascribed to ~~declared major events.~~

~~(3) UCF is the ratio of available energy generation, which excludes events outside of management control, over a given period of time to the reference energy generation over the same time period.~~

~~(4) Combined Cycle Seasonal EFOR measures the generation lost due to forced events~~each, are shown below as a percentage of ~~time~~ the total WPTIP/EAIP award opportunity at target-level performance.

2021 WPTIP/EAIP METRICS

The 2021 WPTIP/EAIP metrics are described in detail below.

TVA Total Spend

What this measures: TVA's ability to keep costs low

Total Non-Fuel Operating and Maintenance, Capital, Non-Fuel Inventory, and Cloud Implementation expenses for corporate and operational Strategic Business Unit organizations (excludes Board of Directors).

Why Is This Metric Used?

Supports the overall TVA goal of maintaining costs and managing rates based on spending levels approved by TVA management and the TVA Board.

Load Not Served

What this measures: Transmission system outages that affect TVA customers

Load Not Served ("LNS") is a measure of the magnitude and duration of transmission system outages that affect TVA customers expressed in System Minutes. An automatic customer interruption with a duration of one minute or greater is tracked as a LNS event. LNS events caused by TVA on a distributor system will also count as a TVA event even if the TVA system remains energized. LNS excludes interruptions due to declared major events, variances, gunfire, vandalism, and verified tornadoes.

Why Is This Metric Used?

TVA manages this critical indicator to reduce the impact of customer outages.

Annualized Nuclear Unit Capability Factor

What this measures: Nuclear plant availability

Annualized Nuclear Unit Capability Factor is the ratio of available energy generation, which excludes events outside of management control, over a given period of time to the reference energy generation over the same time period.

Why Is This Metric Used?

Monitors progress in attaining high unit and energy production reliability.

Combined Cycle Equivalent Availability Factor

What this measures: Combined cycle plant reliability

Combined Cycle Equivalent Availability Factor ("EAF") reflects the percentage of time over a given period that a generating unit was available to generate power for TVA combined cycle generating assets, based on Generating Availability Data System ("GADS") event reporting guidelines for megawatt hour losses. Combined Cycle EAF excludes events classified as outside management control and variances.

Why Is This Metric Used?

Combined Cycle EAF focuses on ensuring TVA combined cycle generating assets are available and reliable to meet system demand.

Coal Equivalent Availability Factor

What this measures: Coal plant reliability

Coal EAF reflects the percentage of time over a given period that a generating unit was available to generate power for TVA coal-fired generating assets, based on GADS event reporting guidelines for megawatt hour losses. Coal EAF excludes events classified as outside management control and variances.

Why Is This Metric Used?

Coal EAF focuses on ensuring TVA coal generating assets are available and reliable to meet system demand.

In setting the goal for each metric, consideration is given to TVA's historic performance, its strategic business plan priorities and strategic benchmarking goals, customer and stakeholder feedback, environmental and regulatory concerns and goals, and the competitive environment. Achievement of the target goal would ~~have been scheduled~~result in a 100 percent payout with respect to ~~run. This measure runs~~that goal. A threshold goal is also set for each metric, so that no payout would occur with respect to metrics that fail to achieve that threshold. Additionally, a stretch goal for each metric is set to incentivize and reward exceptional performance. Linear interpolation is used for results between threshold and stretch goals.

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2021 Executive Annual Incentive Plan Results

The performance results on the 2021 TVA Enterprise Scorecard are set forth below. Performance resulted in a 142 percent payout (on a scale from ~~December~~0 percent – 150 percent payout).

TVA'S 2021 ENTERPRISE SCORECARD PERFORMANCE

Note

(1)On April 30, 2021, the CEO approved a revision to ~~March~~the performance goals for the Annualized Nuclear Unit Capability Factor measure. The revision is described above in Notable 2021 Actions – Changes to Performance Goals to Account for External Factors and ~~June to September for 2019. Based on Generating Availability Data System ("GADS") event reporting guidelines for megawatt hour losses. Excludes GADS events classified as "Outside~~Impacts Beyond Management ~~Control." Targets exclude any newly commissioned units for first full fiscal year of operations.~~Control – Performance Goals – 2021 Annual Incentive Award.

(5) Coal Seasonal EFOR measures the generation lost due to forced events as a percentage of time the unit would have been scheduled to run. This measure runs from December through March and June through September and includes all coal plants. Based on GADS event reporting guidelines for megawatt hour losses. Excludes GADS events classified as "Outside Management Control." Targets exclude any forecasted units to be retired in fiscal year of retirement.

Corporate Multiplier. Allows TVA Board to Adjust for Overall Performance

As in previous years, the TVA Board approved the use of a corporate multiplier for the 2021 WPTIP/EAIP program. The corporate multiplier ranges between 0 and 1.0 and can be used only for purposes of reducing the amount of the award. The multiplier was based on performance in 2021 against goals set in November 2020 for six organizational metrics. For 2021, the TVA Board determined that the corporate multiplier should be 1.0 based on the following:

•Continued strong safety performance – top quartile in SIIR

•Strong financial health and performance

•Efforts continued to attract and encourage the expansion of business and industries in 2021

•Over $8.8 billion in investments, and

•Approximately 80,900 jobs created or retained

•Achieved outstanding results despite the challenges associated with the continued COVID-19

Why does the TVA Board use a multiplier?

The multiplier allows the TVA Board to qualitatively assess the organization's performance, emphasizing the importance of safety, financial health, reputation, and economic development.

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Corporate Multiplier Factors


Metric		Definition	Why Is This Metric Used?
Safety – Serious Injury Incident Rate (SIIR)		A mathematical calculation used by Edison Electric Institute that quantifies the extent of injury for serious injuries and fatalities from events within the control of the employee and/or the employer.	TVA shares a professional and personal commitment to protect the safety of its employees, its contractors, its customers, and those in communities that TVA serves.
	Total Financing Obligations (TFO) and Liabilities	All statutory debt and other financing obligations. TFO and Liabilities is calculated by subtracting contributions to unfunded liabilities from the sum of (1) long-term debt, net (including unamortized premiums/discounts), (2) short-term debt, net, (3) leaseback obligations, (4) energy prepayment obligations, and (5) variable interest entities.	TVA's TFOs are driven by its business plan and reflect the application of financial guiding principles. Focusing on this measure will improve TVA's fiscal performance and strengthen TVA's balance sheet.
	Cash Flow from Operating Activities	Amount of cash generated from power production and other mission-related activities and generally defined as operating revenues received less cash payments made for operating expenses. See Item 8, Financial Statements and Supplementary Data – Consolidated Statements of Cash Flows for additional information.	Cash Flow from Operating Activities is considered a key indicator of overall financial health as it measures TVA's ability to use cash received from customers to sufficiently fund outgoing cash expenditures.
	Net Income	Consists of the organization’s net earnings derived by adjusting revenues for the cost of doing business, including the cost of sales, depreciation, interest, taxes, and other expenses. See Item 8, Financial Statements and Supplementary Data – Consolidated Statements of Operations for additional information.	Standard accounting measure that provides a view of TVA's financial performance position.
Jobs Created and Retained		Measures the number of new or retained jobs in the Tennessee Valley for which TVA has played a role in the recruitment or retention of the economic development project.	Tracks its progress using an industry standard measure. Jobs Created and Retained is a measure that economic developers can speak to and easily understand, and an established tracking mechanism is in place to measure TVA's economic development efforts.
Board Level Significant Events		Includes items deemed significant by the TVA Board of Directors. These items may affect TVA's reputation with its customers and its stakeholders, the organizational health of the workforce, or its impact on the public at large. Both favorable and unfavorable events will be considered.	An incentive pay program, by design, cannot cover the entire scope of activities that could occur during a given cycle. This measure allows the TVA Board to deem certain reputational, environmental, or other items as significant impacts to TVA's business. Items that may be considered significant (either favorably or unfavorably) include customer survey results, stakeholder survey results, key indicators of organizational health, environmental events, or other major events not covered in other performance measures.

The TVA Board ~~approved~~and the ~~use~~CEO jointly qualitatively assessed TVA’s performance at the end of athe 2021 performance period. Based on the performance of the 2021 corporate multiplier ~~for the WPTIP and EAIP. The corporate multiplier ranges between 0 and 1.0 and can be used only for purposes of~~ ~~reducing~~ ~~the amount of the award. For 2019,~~measures, the TVA Board determined ~~that the corporate~~to apply a 1.0 multiplier, ~~should be 1.0 based on the following:~~

~~Safety better than top decile;~~

~~Strong financial performance reduced debt~~or no reduction to the ~~lowest level in almost 30 years and met the 10-year Long-Range Financial Plan goals in six years;~~

~~Zero Board level significant events; and~~

~~Strong role in stimulating economic development and investment.~~calculated WPTIP/EAIP payout.

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Corporate Multiplier Plan Actual
Safety - Recordable Incident Rate (RIR)⁽¹⁾
0.00
0.44
Financial Health
Total Financing Obligations (TFO) and Liabilities ($ Billion)⁽²⁾
$ 23.8
$ 22.5
Operating Cash Flow ($ Million)⁽³⁾
$ 3,146
$ 3,720
Net Income ($ Million)⁽⁴⁾
$ 1,363
$ 1,417
Jobs Created and Retained⁽⁵⁾
50,000-75,000
66,572
Board Level Significant Events⁽⁶⁾
0
0
CORPORATE MULTIPLIER MEASURES (0.0 – 1.0 MULTIPLIER)

~~Notes~~

Note

(1) ~~Recordable Incident Rate is defined as the number~~Includes impact of ~~recordable injuries (as defined by TVA's safety program) per 200,000 employee-hours worked by TVA employees and staff augmentation contractors (excluding hearing events)~~partnership credits. Partnership credits are wholesale bill credits provided to local power company customers who are party to 20-year Partnership Agreements with TVA. For more information, see Item 1, Business — Rates.

(2) Total Financing Obligations and Liabilities is calculated by subtracting contributions to unfunded liabilities from the sum of (1) long-term debt, net (including unamortized premiums/discounts), (2) short-term debt, net, (3) leaseback obligations, (4) energy prepayment obligations, and (5) variable interest entities ("VIE").Individual Performance Multiplier Reinforces Pay for Performance

(3) Operating Cash Flow is the amount of cash generated from power production and other mission-related activities. It is generally defined as operating revenues received less cash payments made for operating expenses. See Item 8, Financial Statements and Supplementary Data ~~— Consolidated Statements of Cash Flows~~ ~~for additional information.~~

~~(4) Net Income consists of the organization's net earnings derived by adjusting revenues~~Annually, individual goals for the ~~cost of doing business, including the cost of sales, depreciation, interest, taxes, and other expenses. See Item 8, Financial Statements and Supplementary Data -~~ ~~Consolidated Statements of Operations~~ ~~for additional information.~~

~~(5) Jobs Created and Retained measures the number of new or retained jobs in the Tennessee Valley for which TVA has played a role in the recruitment or retention of the economic development project.~~

(6) Board Level Significant Events include items deemed materially significant to the TVA Board and that affect TVA's reputation with its customers and its stakeholders, the organizational health of the workforce, or TVA's impact on the public at large.

~~Individual Performance Multiplier. Annually, individual goals~~NEOs are established at the beginning of each performance cycle. ~~Once all~~These goals tie to the achievement of TVA's mission and strategic objectives. A 50 percent weighting is assigned to business goals, and a 50 percent weighting is assigned to leadership competencies. No numerical measures are assigned to the goals. Rather, at the end of the performance period, the CEO assesses the performance of the other ~~preliminary 2019 EAIP payouts were calculated~~NEOs and informs the ~~corporate~~Committee of his decision on a multiplier ~~was applied, Mr. Lyash, as~~for each NEO. For the CEO ~~and in~~Individual Performance Multiplier, each TVA Board member assesses the CEO's performance at the end of a performance period on a scale of 1–5, with "5" representing superior performance. Results of the assessment are provided to the TVA Board Chair who, after consultation with the Committee, ~~evaluated~~determines the multiplier to be applied to the CEO. For each ~~NEO's performance based upon individual performance goals (except his own) to determine~~NEO, the individual performance multiplier can range between 0% to 150% of the calculated payout and can be used to ~~calculate his~~reduce (multiplier below 100%) or ~~her payout as set forth in~~increase (multiplier above 100%) the ~~formula above. Each~~amount of the non-CEO NEOs was assigned an Individual Performance Multiplier of 100 percent except for Mr. Thomas, who was assigned an Individual Performance Multiplier of 110 percent based on his strong performance during the fiscal year.award.

In addition, the TVA Board Chair, in consultation with the Committee and with input from individual members of the TVA Board, evaluated Mr. Lyash's performance as CEO during 2019 to determine his Individual Performance Multiplier under the EAIP. Based on this review, the TVA Board Chair decided that Mr. Lyash's final Individual Performance Multiplier should be 112 percent based on TVA's 2019 performance. This recommendation was based on TVA’s strong financial performance including the development of a 10-year financial plan, focus on people performance excellence and developing the workforce for sustained optimal performance, engagement of key stakeholders, recognition of embracing continuous improvement, and successful demonstration of TVA values and behaviors.

~~EAIP Payouts. As a result of the above process,~~For 2021, the NEOs were ~~awarded~~evaluated on individual performance goals and the following ~~EAIP~~leadership competencies:

Leadership Competencies

Inspiring Trust and Engagement

Continuous Improvement

Vision, Innovation, & Strategic Execution

Leadership Courage

Building Organizational Talent

Accountability and Driving Results

Adaptability

Business Acumen

Effective Communication

Leveraging Diversity

The 2021 individual multipliers and award payouts ~~for 2019 in comparison to the 2019 target payouts:~~

2019 EAIP Payouts
Named Executive Officers Salary
Target EAIP
Incentive
Opportunity
(% of Salary)

Target
EAIP Payout
Scorecard Results After Application of Corporate Multiplier Individual Performance Multiplier Actual EAIP Payment
Jeffrey J. Lyash⁽¹⁾
$ 920,000
150% $ 663,462
116% 112% $ 861,969
William D. Johnson⁽²⁾
1,150,000
150% 1,009,409
116% 100% 1,170,915
John M. Thomas, III 647,169
80% 517,735
116% 110% 660,630
Michael D. Skaggs 620,000
80% 496,000
116% 100% 575,360
Sherry A. Quirk 541,059
70% 378,741
116% 100% 439,340
Timothy Rausch⁽³⁾
520,000
70% 350,000
116% 100% 406,000

~~Note~~

~~(1) Mr. Lyash's Target EAIP Payout was prorated based on time in position, April 8, 2019 through September 30, 2019. Target for a full performance period would be $1,380,000.~~

~~(2) Mr. Johnson's Target EAIP Payout was prorated based on retirement and time in position, October 1, 2018 through May 1, 2019. Target for a full performance period would be $1,725,000.~~

~~(3) Mr. Rausch's Target EAIP Payout was prorated based on time in position, October 15, 2018 through September 30, 2019. Target for a full performance period would be $364,000.~~

~~Awards~~ to the NEOs under the 2021 EAIP ~~for 2019~~ are described under each executive's compensation scorecard under 2021 Pay Decisions - 2021 NEO Pay Decisions and Compensation Scorecards below. Award payouts are also reported in the "Non-Equity Incentive Plan Compensation" column in the Executive Compensation Tables and Narrative Disclosures - Summary Compensation Table.

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Long-Term Incentive ~~Compensation.~~ ~~In addition to the EAIP, certain~~Plan Compensation

Certain executives in critical positions, including the ~~Named Executive Officers,~~NEOs, participate in the company's long-term ~~compensation plans.~~incentive plan. These individuals make decisions that significantly influence the development and execution of TVA's long-term strategic objectives. As such, ~~the long-term compensation plans~~awards under TVA's LTIP are designed to reward executives for ~~helping TVA improve in areas directly related to TVA's~~sustainable success. Since long-term success ~~by:~~is supported by a commitment to continued employment, the NEOs are incentivized to remain with the company through the cliff vesting feature of the long-term performance awards and through long-term retention awards.



LONG-TERM AWARDS REWARD LONG-TERM SUCCESS									LONG-TERM INCENTIVE AWARDS

•Enterprise-wide performance criteria that are directly aligned with TVA's mission •"Cumulative" performance approach to measure performance achieved over a three-year period with a new three-year performance cycle beginning each year •Potential payment range of 0 percent to 150 percent of target incentive opportunity to enable awards that are commensurate with performance achievements •Award opportunities established for each performance cycle at or below median levels of competitiveness with TVA's peer group •LTP awards vest upon the completion of the three-year performance period, contingent upon continued employment through vesting date and subject to achievement of performance goals •LTR awards vest in one-third increments over three years, contingent upon continued employment on each vesting date

~~Using enterprise-wide performance criteria that are directly aligned with TVA's mission;~~

~~Using a "cumulative" performance approach to measure performance achieved over a three-year period with a new three-year performance cycle beginning each year;~~

~~Using a potential payment range~~The TVA Board and Mr. Lyash evaluated the appropriateness of ~~50 percent to 150 percent of target~~the long-term incentive ~~opportunity to enable awards that are commensurate with performance achievements; and~~

~~Establishing~~ award opportunities for ~~each~~the CEO and other NEOs, respectively. For 2021, the value of both the long-term performance ~~cycle at~~award (at target) and the long-term retention awards were increased from 2020 levels, for Mr. Lyash, Mr. Thomas, and Mr. Skaggs, so that ~~approximate~~TDC moved closer to market median, ~~levels~~following a review of ~~competitiveness with TVA's peer group~~benchmarking and ~~adhering to~~individual performance and reflective of increased tenure. Accordingly, target long-term incentive award opportunities of the ~~Committee's policy that (i) approximately 70 to 80~~NEOs for 2021 were as follows:


Named Executive Officers	2021–2023 LTP(1)		Value at target(2)		% Increase from 2020–2022 LTP target value		2021 LTR(1)		Value(2)		% Increase from 2020 LTR award value
Mr. Lyash	264.9	%	$	2,914,100	24.5	%	113.5	%	$	1,248,900	23.2	%
Mr. Thomas(3)	135.8	%	$	1,039,000	6.0	%	57.6	%	$	441,000	5.0	%
Mr. Rausch	90.6	%	$	500,000	—	%	59.8	%	$	330,000	—	%
Mr. Fountain(4)	104.2	%	$	562,500	50.0	%	58.6	%	$	316,500	N/A
Mr. Moul(5)	77.0	%	$	588,750	—	%	77.0	%	$	588,750	—	%
Mr. Skaggs	170.3	%	$	1,175,000	18.7	%	73.1	%	$	504,000	17.5	%

Notes

(1)Represents a percent of each ~~executive's total long-term incentive opportunity~~NEO's salary.

(2)Amount may be ~~performance-based (under~~prorated based on time in role.

(3)Effective June 7, 2021, in connection with job title change and additional scope and responsibilities, Mr. Thomas was awarded a prorated grant of $1,039,000, which replaced the ~~performance-based awards under the LTIP) and (ii) approximately 20 to 30 percent~~2021-2023 LTP grant of ~~each executive's total long-term incentive opportunity be retention-oriented under the LTIP as described below under~~ ~~Long-Term Retention Arrangements~~.

~~Effective~~$1,000,000 made on October 1, ~~2018, TVA granted~~2020, and a prorated LTR grant of $441,000, which replaced the ~~following LTP awards:~~2021-2023 LTR grant of $432,000 made on October 1, 2020.

Named Executive Officers
LTP/Long-Term Performance Grant⁽¹⁾
Mr. Lyash⁽²⁾
N/A
Mr. Johnson⁽³⁾
$ 2,537,500
Mr. Thomas 880,000
Mr. Skaggs 980,000
Ms. Quirk 685,000
Mr. Rausch 404,250

~~Note~~

~~(1) All awards vest September 30,~~(4)Effective March 5, 2021, ~~and~~in connection with selection to his position, Mr. Fountain was awarded a prorated grant of $562,500, which replaced the ~~actual amount the executives receive upon payout may vary based on organizational performance under the LTIP.~~

~~(2) Mr. Lyash did not receive a~~2021-2023 LTP grant ~~because he~~of $375,000 made on October 1, 2020, and a prorated LTR grant of $316,500, which replaced the 2021-2023 LTR grant of $249,000 made on October 1, 2020.Mr. Fountain joined TVA in 2020 and was not ~~employed on the date the grants were issued, October 1, 2018. He was~~ eligible for a ~~grant on October 1, 2019.~~LTR award in 2020.

~~(3)~~(5)Effective June 21, 2021, in connection with his employment with TVA, Mr. ~~Johnson's~~Moul was awarded three prorated LTP ~~was adjusted to $493,403 upon retirement, which represents~~grants:$588,750 for the 2021-2023 LTP cycle, $327,083 for the 2020-2022 LTP cycle, and $65,417 for the 2019-2021 LTP cycle; and three prorated ~~portion~~LTR grants:$588,750 for 2021-2023, $218,056 for 2020-2022, and $21,806 for 2019-2021.All of ~~the grant~~these grants were based on a target grant amount of $785,000 and prorated based on time in role during each performance cycle.

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Long-Term Performance Awards

TVA's executive compensation program provides for an annual grant of a LTP award with a three-year performance period. During 2021, there were three overlapping LTP awards:


2019–2021 LTP Award						Vested September 30, 2021
2020–2022 LTP Award						Vesting September 30, 2022
2021–2023 LTP Award						Vesting September 30, 2023

The performance metrics and threshold, target, and stretch goals for each metric are determined annually by the ~~number~~TVA Board. Following the TVA Board's approval of ~~months he was employed during~~performance achievement at the end of each three-year performance period, awards are paid out in cash early in the subsequent fiscal year. Target performance provides for a 100 percent payout opportunity, performance below threshold provides for no payout, performance at threshold provides for a 50 percent payout opportunity, and performance at stretch provides for a 150 percent payout opportunity. Linear interpolation is used for results between threshold and stretch goals. The TVA Board can use its discretion to adjust the final payout for LTP awards based on achievements, peer group comparisons, and performance over the performance cycle.

LTP
Incentive
Amount

Target
Value

Percent of Opportunity Achieved
(0% to 150%)

For the three-year ~~cycle~~performance period ended September 30, ~~2019,~~2021, the TVA Board previously approved three overall long-term incentive measures of TVA performance to be applied to all participants in the ~~LTIP:~~

~~Non-Fuel Delivered Cost of Power;~~

~~Load Not Served (the product~~LTP. The 2019–2021 performance measures, along with the weighting ascribed to each, are shown below as a percentage of the ~~percentage~~total LTP award opportunity at target-level performance.

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2019-2021 LTP

PERFORMANCE

METRICS

The 2019–2021 LTP metrics are described in detail below.

Non-Fuel Delivered Cost of Power

What this measures: Non-fuel expenses (cents/kWh)

The Non-Fuel Delivered Cost of Power performance measure is a financial measure. The Non-Fuel Delivered Cost of Power measure is equal to the sum of (i) non-fuel operating and maintenance ("O&M") expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales.

Why Is This Metric Used?

This measure drives performance through activities that management can control. It aligns with TVA's strategic objective of maintaining low rates and focuses on aligning TVA’s non-fuel costs associated with generation, transmission, statutory mission services, and additional customer services with revenue. Non-Fuel Delivered Cost of Power supports retail rate objectives and aligns to the Business Plan commitment.

Load Not Served

What this measures: Transmission system outages that affect TVA customers

Load Not Served ("LNS") is a measure of the magnitude and duration of transmission system outages that affect TVA customers expressed in system minutes. An automatic customer interruption with a duration of one minute or greater is tracked as an LNS event. LNS events caused by TVA on a distributor system will also count as a TVA event even if the TVA system remains energized. LNS excludes interruptions due to declared major events, variances, gunfire, vandalism, and verified tornadoes.

Why Is This Metric Used?

An automatic customer interruption with a duration of one minute or greater is tracked as an LNS event. TVA manages this critical indicator to reduce the impact of customer outages.

External Measures

What this measures: External perception and reputational events

External Performance Indicators for the TVA Nuclear Fleet – Weighted combination of key nuclear performance indicators based on standard nuclear industry definitions for station performance.

Media Tone – Measures the percent of positive and balanced media coverage out of total TVA news coverage.

Stakeholder Survey – Conducted among the general public, public officials, economic development leaders, and business/community leaders in the TVA service area to assess public opinion of TVA.

Customer Survey – Annual survey of LPCs and Direct-Serve Customers focused on better understanding customer loyalty and related performance drivers.

Board Level Significant Events – Items (both favorable and unfavorable) that the Board deems significant and that affect TVA's reputation, organizational health, or the public at large

Why Is This Metric Used?

Targets for these measures represent incremental improvement in external perceptions of TVA's performance and brand.

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Consistent with its public power mission, TVA's long-term performance metrics include the ~~number~~results of ~~minutes~~surveys that assess the external reputation and perception of TVA and TVA's effectiveness in carrying out its mission and strategic objectives. These metrics reflect TVA's focus on meeting or exceeding customer expectations and identifying areas for continuous improvement.

In setting the goal for each metric, the TVA Board considers budgeted amounts in the ~~measurement period);~~company's approved business plans, actual performance in recent years, and level of achievability. The TVA Board also considers TVA's strategic business plan priorities and strategic benchmarking goals, customer and stakeholder feedback, environmental and regulatory concerns and goals, and the competitive environment. Achievement of the target goal would result in a 100 percent payout opportunity with respect to that goal. A threshold goal is also set for each metric, so that no payout would occur with respect to metrics that fail to achieve that threshold. Additionally, a stretch goal for each metric is set to incentivize and reward exceptional performance. Linear interpolation is used for results between threshold and stretch goals.

~~External Measures (including external nuclear performance indicators, stakeholder survey, media tone, customer survey, and Board level significant events).~~

2019–2021 LTP Award Performance Results

The ~~Non-Fuel Delivered Cost~~performance results on the 2021 TVA Enterprise Scorecard are set forth below. Performance resulted in a payout of ~~Power~~132 percent of target opportunity.

2019–2021 Long-Term Performance Scorecard

Notes

(1)For the 2019–2021 performance ~~measure is a financial measure not affected by weather or customer behavior. The~~cycle, the Non-Fuel Delivered Cost of Power measure ~~is equal to~~was calculated using an average of the ~~sum of (i) non-fuel operating~~2019, 2020, and maintenance expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales. TVA chooses to use this measure as it drives performance through activities that management can control. The 2017-20192021 results.

(2)For the 2019–2021 performance cycle, ~~had a threshold goal of 3.65, a target goal of 3.51, and a stretch goal of 3.37.~~

~~The~~the Load Not Served measure was calculated using an average of the 2019, 2020, and 2021 results.

(3)For the 2019–2021 performance measure reflects the percentage of total load not served multiplied by the number of minutes in the period (with the value expressed in system minutes and excluding events during declared major storms) during the three-year cycle, ended September 30, 2019, with a threshold goal of 4.8, a target goal of 4.0, and a stretch goal of 3.5. Load Not Served events caused by TVA on a distributor system will also count as a TVA event even if TVA's system remains energized.

The External Measures represent TVA's performance in areas including external nuclear performance indicators, stakeholder survey, media tone, customer loyalty, and Board level significant events. Targets for the External Measures are based on making incremental improvements in external perceptions of TVA's performance and brand. The nuclear performance measure was based on 2019 results, with a threshold goal of 88.0 (third quartile), a target goal of 91.0 (between median and top quartile), and a stretch goal of 94.0 (better than top quartile). The media tone, stakeholder survey, customer survey, and Board level significant events measuresmetrics were calculated using an average of the ~~2017, 2018,~~2019, 2020, and ~~2019~~2021 results (except for the External Performance Indicators for the TVA Nuclear Fleet measure, which was based on 2021 results).

(4)For the 2019-2021 performance cycle, the External Performance Indicators for the Nuclear Fleet measure was calculated using 2021 results. On April 29, 2021, the Board approved a revision to the External Performance Indicators for the Nuclear Fleet measure. The ~~media tone measure had a threshold~~revision is described above in Notable 2021 Actions – Changes to Performance Goals to Account for External Factors and Impacts Beyond Management Control –Performance Goals – 2019-2021 LTP Awards.

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In reviewing the 2019–2021 performance period, the TVA Board considered strong performance in several areas, including key areas where performance exceeded target expectations:

ü Achieved record-setting safety rates in 2020 and 2021

•Top decile performance for TVA’s Recordable Injury Rate in 2021

•Top quartile performance for TVA’s Serious Injury Rate in 2021

ü Strong transmission system reliability performance – 2020 and 2021 were the two best years on record

ü Strong financial performance

•In 2020, TVA achieved and surpassed its strategic goal of ~~85.0,~~reducing debt to $21.8 billion by 2023, and made even further reductions in debt in 2021

•TFOs of $20.5 billion are the lowest in over 30 years

•Lower interest expense in 2021 compared to 2020 mainly due to lower debt levels

•Issued Green Bond offering, with lowest interest rate on a ~~target goal~~10-year financing in TVA history

ü Strengthened customer relationships:

•95% of ~~89.0,~~153 LPCs have signed with TVA under 20-year Partnership Agreement

•Made $1 billion of credit available to LPCs and ~~a stretch goal~~offered regulatory relief and flexibility so LPCs could help their communities

•Continued Back-to-Business Credit Program established in 2020

•Continued to partner with LPCs through the Community Care Fund established in 2020

•Strong Media Tone results in 2021 show significant improvement over 2020 performance

•Three-year Stakeholder Survey results approached level considered “outstanding” by survey provider; strong 2021 results show improvement over performance period

•Customer Survey reflects high commitment levels and improved scores from 2020 to 2021

ü Continued efforts in 2019-2021 to attract and encourage the expansion of ~~91.7. The stakeholder survey measure had a threshold goal of 81.0, a target goal of 82.5,~~business and ~~a stretch goal of 84.0. The customer survey measure had a threshold goal of 64.7, a target goal of 66.3,~~industries, resulting in $26.4 billion in investments and ~~a stretch goal of 68.0.~~ approximately 215,000 jobs created or retained

ü Launched enterprise IwD Council

The TVA Board ~~level significant events measure had a threshold goal of two unfavorable events, a target goal of zero events,~~determined that the calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and ~~a stretch goal of two favorable events.~~did not exercise its discretion to adjust the calculated payout. Payouts to the NEOs for the 2019–2021 LTP Award are described under each executive's compensation scorecard under 2021 Pay Decisions – 2021 NEO Pay Decisions and Compensation Scorecards below and reported in the Executive Compensation Tables and Narrative Disclosures -Summary Compensation Table under "Non-Equity Incentive Plan Compensation."

2020–2022 Outstanding LTP Performance Cycle

The TVA Board previously approved the following ~~table shows the~~overall LTP measures of TVA performance ~~goals and weighting and percent of opportunity achieved~~ for ~~the performance-based awards (LTP) under the LTIP~~all participants for the three-year cycle ~~ended~~ending September 30, ~~2019:~~2022 (awards to be paid in November 2022):

TVA 2017 - 2019 Long-Term Incentive Plan Scorecard
Long-Term Incentive Measure Weight Threshold Target Stretch Actual
Non-Fuel Delivered Cost of Power (2017-2019) 40% 3.65 3.51 3.37 3.46

Load Not Served (2017-2019) 30% 4.8 4.0 3.5 3.8

External Measures (2017-2019) 30% 80.6 88.4 96.1 86.2
External Nuclear Performance Indicators 25% 88.0 91.0 94.0 80.4
Media Tone % 15% 85.0 89.0 91.7 89.3
Stakeholder Survey % 15% 81.0 82.5 84.0 80.0
Customer Survey % 15% 64.7 66.3 68.0 71.3
Board Level Significant Events 30% -2.0 0.0 2.0 0.0
Calculated Payout 109%
Approved Payout 116%
Notes

~~In August 2018,~~(1)Metric has same definition as for the ~~TVA Board approved replacing~~2019-2021 LTP awards. For the ~~LTP financial measure Wholesale Rate Excluding Fuel with~~2020-2022 performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using an average of the results for each of 2020, 2021, and 2022.

(2)Metric has same definition as for the ~~future~~2019-2021 LTP awards. ~~Wholesale Rate Excluding Fuel had not historically reflected TVA's financial~~For the 2020-2022 performance as~~it is largely impacted by weather~~cycle, the Load Not Served measure will be calculated using an average of the results for each of 2020, 2021, and ~~customer behavior. The TVA Board and management believe that replacing the measure with Non-Fuel Delivered Cost of Power will drive performance through activities that management can influence.~~2022.

~~The TVA Board used its discretion and adjusted payouts~~(3)Metric has same definition as for the ~~2017 - 2019~~2019-2021 LTP awards. For the 2020-2022 performance cycle, ~~to 116% to better reflect goal achievement, overall strong~~the External Performance Indicators for the TVA Nuclear Fleet measure will be calculated based on 2022 results.

(4)For the 2020-2022 performance ~~and financial discipline.~~

~~Additional highlights of~~cycle, the ~~2017 - 2019 performance period include:~~

~~Strong financial performance reduced debt~~External Performance Indicators for the Nuclear Fleet measure will be calculated using 2022 results. On August 18, 2021, the Board approved a revision to the ~~lowest level in almost 30 years and met the 10-year Long-Range Financial Plan goals in six years;~~

~~Strong transmission system reliability performances;~~

~~"Outstanding" customer survey results; and~~

~~Customer survey reflects high commitment levels.~~

~~As a result, the NEOs were awarded the following LTP payouts~~External Performance Indicators for the ~~2017 - 2019 performance cycle:~~Nuclear Fleet measure. The

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Named Executive Officers
Target
LTP Grant Vesting September 30, 2019

Calculated LTP Payout⁽²⁾

Approved LTP Payout⁽³⁾
Jeffrey J. Lyash N/A
N/A
N/A
William D. Johnson⁽¹⁾
$ 2,090,606
$ 2,278,761
$ 2,425,103
John M. Thomas, III 750,000
817,500
870,000
Michael D. Skaggs 750,000
817,500
870,000
Sherry A. Quirk 675,000
735,750
783,000
Timothy S. Rausch N/A
N/A
N/A
revision is described above in Notable 2021 Actions – Changes to Performance Goals to Account for External Factors and Impacts Beyond Management Control – Performance Goals – 2020-2022 LTP and 2021-2023 LTP Awards.

~~Note~~

~~(1) Mr. Johnson's initial LTIP grant~~(5)Comprised of Media Tone, Stakeholder Survey and Customer Survey, which have the same definitions as for the 2019-2021 LTP awards. Board Level Significant Events was inremoved as a metric. For the amount of $2,427,800. He retired effective May 2, 2019. Based on the provisions of the LTIP Plan, Mr. Johnson's grant was prorated based on the 31 months (October 1, 2016 - April 30, 2019) he was employed during the2020-2022 performance cycle, ~~(October 1, 2016 - September 30, 2019).~~the External Measures metrics will be calculated using an average of results for each of 2020, 2021, and 2022.

~~(2) Amount based on calculated payout of 109%.~~

~~(3) Amount based on approved payout of 116%.~~

~~Awards to the NEOs for the LTP performance cycle that ended September~~30, 2019 are reported in the Summary Compensation Table. The amount of the award based on the calculated scorecard is reported as Non-Equity Incentive Plan Compensation. The discretionary adjustment ("LTP Scorecard Adjustment") is reported as a Bonus in the Summary Compensation Table.

~~2018 - 2020~~2021–2023 Outstanding LTP Performance Cycle

~~The~~In November 2020, the TVA Board approved the following overall LTP measures of TVA performance for all participants for the three-year cycle ending September 30, ~~2020~~2023 (awards to be paid in November ~~2020)~~2023):

Performance Measure

Weight
Threshold
(50%)
Target
(100%)
Stretch
(150%)
Non-Fuel Delivered Cost of Power⁽¹⁾
40% 3.57 3.43 3.29
Load Not Served⁽²⁾
30%
4.8
Between top quartile and top decile
4.0
2017 - 2019 average rate based on business plans
3.6
Better than top decile
External Measures⁽³⁾
30% 81.6 89.4 97.1

Notes

(1) ~~On August 22, 2018, the TVA Board approved replacing the Wholesale Rate Excluding Fuel measure with~~ Non-Fuel Delivered Cost of Power ~~for the 2018 - 2020 performance cycle because the Wholesale Rate Excluding Fuel measure has not historically reflected TVA's financial performance. The Non-Fuel Delivered Cost of~~= (Operating and Maintenance Expense + Base Capital Expense + Interest Expense + Other Expense) / Budgeted Electric Power ~~measure is equal to the sum of (i) non-fuel operating and maintenance expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales.~~Sales. For the ~~2018 - 2020 LTIP performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using 2020 results.~~

(2) Load Not Served is equal to the product of (i) the percentage of total load not served and (ii) the number of minutes in the period (excluding interruptions due to declared major events). Value is expressed in system minutes and is the average of the three years within the LTIP performance cycle. Load Not Served events caused by TVA on a distributor system will also count as a TVA event even if TVA's system remains energized. For the 2018-2020 LTIP performance cycle, the Load Not Served measure will be calculated using an average of the 2018, 2019, and 2020 results. The target Load Not Served measure is the average of the rates for 2018, 2019 and 2020 that were set forth in the approved business plans for 2016, 2017, and 2018, respectively.

(3) For the 2018 - 2020 LTIP performance cycle, the External Measures metric will be calculated using an average of the 2018, 2019, and 2020 results (except for the External Nuclear Performance Indicators measure, which will be based on 2020 results). On August 25, 2016, the TVA Board revised (1) the method for calculating the External Nuclear Performance Indicators measure and (2) the goals related to this measure. The changes were adopted because the external party that rates the performance of TVA's nuclear fleet revised the industry standard metric for its rating index and provided new guidance on reporting requirements related to the addition of Watts Bar Unit 2 into TVA's nuclear fleet.

~~2019 - 2021 Outstanding LTP Performance Cycle~~

~~The TVA Board approved the following overall LTP measures of TVA performance for all participants for the three-year cycle ending September 30, 2021 (awards to be paid in November 2021):~~

Performance Measure

Weight
Threshold
(50%)
Target
(100%)
Stretch
(150%)
Non-Fuel Delivered Cost of Power⁽¹⁾
40% 3.57 3.44 3.30
Load Not Served⁽²⁾
30% 4.8 4.0 3.6
External Measures⁽³⁾
30% 82.0 89.8 97.5

~~Notes~~

(1) Non-Fuel Delivered Cost of Power measure is equal to the sum of (i) non-fuel operating and maintenance expense, (ii) base capital expense, (iii) interest expense, and (iv) other expense divided by budgeted electric power sales. For the 2019-2021 LTIP2021-2023 performance cycle, the Non-Fuel Delivered Cost of Power measure will be calculated using an average of the ~~2019, 2020,~~2021, 2022, and ~~2021~~2023 results.

(2)Load Not Served ~~is equal to~~= (Percentage of Total Load Not Served) x (Number of Minutes in the ~~product of (i) the percentage of total~~Period). The Load Not Served measure excludes events during declared major events, variances, gunfire, vandalism, and verified tornadoes and includes distributor provided load not served ~~and (ii) the number of minutes in the period (excluding~~estimates for distributor connection point interruptions ~~due to declared major events). Value is expressed in system minutes and is the average of the three years within the LTIP performance cycle. Load Not Served events~~ caused by ~~TVA on a distributor system will also count as a TVA event even if TVA's system remains energized.~~TVA. For the ~~2019 - 2021 LTIP~~2021-2023 performance cycle, the Load Not Served measure will be calculated using an average of the ~~2019, 2020,~~2021, 2022, and ~~2021~~2023 results.

(3)The External Performance Indicators for TVA Nuclear Fleet measure is calculated using a weighted combination of key performance indicators based on standard nuclear industry definitions for station performance, with the maximum obtainable being 100 points.

(4)For the ~~2019 - 2021 LTIP~~2021-2023 performance cycle, the External ~~Measures~~Performance Indicators for the Nuclear Fleet measure will be calculated using 2023 results. On August 18, 2021, the Board approved a revision to the External Performance Indicators for the Nuclear Fleet measure. The revision is described above in Notable 2021 Actions – Changes to Performance Goals to Account for External Factors and Impacts Beyond Management Control – Performance Goals – 2020-2022 LTP and 2021-2023 LTP Awards.

(5)For the 2021-2023 performance cycle, the Stakeholder Survey metric will be the average score of a survey conducted among the general public, public officials, economic development leaders, and business and community leaders in the TVA service area to assess public opinion of TVA. This measure will be calculated using an average of the ~~2019, 2020,~~2021, 2022, and 2023 results.

(6)For the 2021-2023 performance cycle, the Customer Survey metric will be a composite score of customer survey results based on responses to key survey questions related to the impact of customer experience on loyalty to TVA. This measure will be calculated using an average of the 2021, ~~results (except~~2022, and 2023 results.

External Performance Indicators for the TVA Nuclear Fleet, Customer Survey, and Stakeholder Survey remain measures but are no longer components of External ~~Nuclear Performance Indicators measure,~~Measures, which ~~will be based on 2021 results)~~has been removed as a composite metric. Additionally, Media Tone has been removed as a metric, and the weighting for Non-Fuel Delivered Cost of Power has been increased to 45%.

Long-Term Retention Awards

~~Long-Term Retention.~~ As a corporate agency of the U.S., TVA does not have equity securities that it can use to provide stock awards, options, or other equity-based awards as compensation for its employees. The purpose of the retention awards under the LTIP is to provide a retention incentive similar to restricted stock or restricted stock units. These grants are intended to encourage executives to remain with TVA and to provide, in combination with salary, EAIP, and LTP grants, a competitive level of ~~total direct compensation. Awards are designed to constitute approximately 20 to 30 percent of each NEO's total long-term compensation.~~TDC. Grants are generally ~~provided on~~effective as of October 1 and will become one-third vested on each subsequent September 30 or upon death, disability, or retirement if earlier on a pro-rated basis. Each award will be paid in a lump sum within two months of vesting.

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2021 Long-Term Retention Award Grant

Following the market assessment conducted by FW Cook, effective October 1, ~~2018,~~2020, TVA granted ~~the following~~ LTR awards ~~under~~to the ~~LTIP:~~

Named Executive Officers
LTR/Long-Term Retention Grant⁽¹⁾
Mr. Lyash⁽²⁾
N/A
Mr. Johnson⁽³⁾
$ 1,087,500
Mr. Thomas 380,000
Mr. Skaggs 420,000
Ms. Quirk 290,000
Mr. Rausch 173,250

~~Note~~

~~(1) Awards~~NEOs. These awards vest in three equal tranches on September 30, ~~2019,~~2021, September 30, ~~2020,~~2022, and September 30, ~~2021.~~2023, contingent upon continued employment on each vesting date. The amounts of these awards are set forth under "Long-Term Incentive Compensation" above.

~~(2)~~ 2021 Vesting of Outstanding Retention Awards

LTR awards that vested in 2021 are described under 2021 Pay Decisions - 2021 NEO Pay Decisions and Compensation Scorecards below and are reported in the Executive Compensation Tables and Narrative Disclosures - Summary Compensation Table under "Non-Equity Incentive Plan Compensation." The vesting schedule for the three LTR awards outstanding in 2021 is set forth below.

2021 VESTING OF OUTSTANDING RETENTION AWARDS

Notes

(1)Mr. Lyash did not receive a 2019 LTR grant.

(2)Mr. Fountain did not receive a 2020 LTR grant ~~because he~~

2021 Pay Decisions

2021 CEO Pay Decisions Overview

CEO PAY EARNED IN 2021


Base Salary	$	1,100,000
Annual Performance Incentive under Executive Annual Incentive Plan	$	2,928,750	142 percent of target enterprise performance achieved Reflects Individual Performance Multiplier of 125 percent
Long-Term Performance Incentive	$	2,671,680	132 percent of long-term performance achieved for the three-year performance cycle ended September 30, 2021
Long-Term Retention Incentive	$	754,300	2021 tranche of 2020 LTR and 2021 LTR awards

Each year, the Committee makes two key compensation decisions with respect to CEO compensation: the amount of TDC opportunity (which is forward-looking and incentivizes the CEO to perform), and the amount of TDC earned (which rewards the CEO for his prior performance).

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2021 CEO Total Direct Compensation Opportunity

On February 11, 2021, the TVA Board approved compensation adjustments for Mr. Lyash for 2021, increasing each component of Mr. Lyash's TDC over 2020 levels. The adjustments were made following FW Cook’s independent study and market analysis of CEO compensation, Mr. Lyash's increased tenure with TVA, his 2020 performance, and an intent to narrow the gap to the 50th percentile of CEO market compensation while being mindful of TVA’s federal agency status. The target TDC opportunity granted to Mr. Lyash in 2021 is illustrated below.

CEO 2021 TARGET TOTAL DIRECT COMPENSATION OPPORTUNITY

2021 CEO TARGET TOTAL DIRECT COMPENSATION OPPORTUNITY BELOW MARKET(1)

Note

(1)Target market assessment effective October 2020 and included market composite of WTW database and proxy peer group.

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2021 CEO Total Direct Compensation Earned

The TDC that Mr. Lyash earned for 2021 reflected company and individual performance that exceeded targets.

CEO 2021 TOTAL DIRECT COMPENSATION EARNED

Note

(1)Since Mr. Lyash joined TVA during 2019, payout under the 2019-2021 LTP award was ~~not employed on the date the grants were issued, October 1, 2018. He was eligible for a grant October 1, 2019.~~

~~(3) Mr. Johnson retired effective May 2, 2019. Based on the provisions~~prorated two-thirds to reflect his service during two of the ~~LTIP,~~three performance years.

The annual incentive award that Mr. ~~Johnson's LTR grants will be prorated based on the months he was employed during the vesting period.~~

~~Retirement Benefits.~~ ~~TVA sponsors a qualified defined benefit plan ("pension plan") and a qualified defined contribution plan ("401(k) plan"), which are administered by the TVA Retirement System ("TVARS")~~Lyash received reflected an Individual Performance Multiplier of 125 percent. The ~~availability of,~~Committee and ~~level of benefits provided by, these qualified plans are comparable to similar qualified plans provided by companies in TVA's peer group.~~

TVA Board were extremely pleased with Mr. Lyash's performance for 2021. See 2021 Pay Decisions - 2021 NEO Pay Decisions and Compensation Scorecards below for more information.

In addition to ~~its qualified retirement plans, TVA has a SERP for selected executives who are critical to~~TDC Earned (as shown in the ~~ongoing success of the enterprise. TVA's SERP is a non-qualified plan similar to those used by most other companies in its peer group. The purpose of the SERP is to:~~

~~Provide a competitive retirement benefit level that cannot be delivered solely through TVA's qualified retirement plans due to IRS limitations.~~

~~Provide a benefit level (as a percentage replacement of pre-retirement pay) that is more comparable to that of employees who are not subject to the IRS limitations.~~

~~More information regarding these retirement benefits is found following the Pension Benefits Table.~~

~~Health and Other Benefits.~~ TVA offers a group of health and other benefits (medical, dental, vision, life and accidental death and disability insurance, and long-term disability insurance) that are available to a broad group of employees. The NEOs are eligible to participate in TVA's health benefit plans and other non-retirement benefit plans on the same terms and at the same contribution rates as other TVA employees.

~~CEO Compensation Matters.~~ ~~After a thorough review, including the consideration of CEO median compensation data, the Committee recommended that the TVA Board approve the compensation and incentive opportunities for~~table above), Mr. Lyash ~~upon commencement~~was paid $292,000 in 2021 as the third and final tranche of his employment. Mr. Lyash receives an annual salary of $920,000 and a target annual incentive opportunity of 150 percent of his annual salary under the EAIP. He was eligible for an EAIP award for fiscal year 2019, and the amount of the award was prorated based on the number of months he was employed during the fiscal year and was based on individual and corporate performance.

Mr. Lyash is also a participant in the LTIP. Under the LTP component of the LTIP, Mr. Lyash's target grant opportunity is 220 percent of his annual salary. As described in his offer letter, effective October 1, 2019, Mr. Lyash received an initial LTP grant of $2,024,000 for the three-year performance cycle ending on September 30, 2021, and also received a LTP grant of $2,024,000 for the three-year performance cycle ending on September 30, 2022. Under the LTR component of the LTIP, Mr. Lyash's target opportunity is 95.2 percent of his annual salary beginning in fiscal year 2020. Based on an annual salary of $920,000, Mr. Lyash received a LTR grant of $876,000 for the three-year retention period ending on September 30, 2022, and the grant will vest in one-third increments as long as Mr. Lyash remains employed by TVA on the applicable vesting dates: $292,000 on September 30, 2020, $292,000 on September 30, 2021, and $292,000 on September 30, 2022, or upon death or disability if earlier.

~~Mr. Lyash also received~~ a recruitment and relocation incentive under his employment offer letter. This incentive was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of ~~$1,784,000,~~substitute compensation in light of his not being eligible to receive any LTP incentive payments until September 2021.

Why Total Compensation Earned Differs From Compensation Reported

2021 CEO TOTAL COMPENSATION COMPONENTS

•Amounts are estimates of the pension/SERP benefits earned for service during the prior year, determined using assumptions consistent with those used in the financial statements in this Annual Report, set forth in Note 22 - Benefit Plans.

Unlike the amounts reported in the Summary Compensation Table, Mr. Lyash's TDC Earned represents the annual pay decisions by the Committee that specifically reflect its assessment of the company's performance and individual performance and reward the employee for satisfaction of incentive award conditions (enterprise performance and continued employment). Other elements included in the Summary Compensation Table, such as changes in pension values and vesting of recruitment and relocation incentives, are excluded from TDC Earned because they do not relate to performance and are outside the scope of the Committee's annual pay decisions. The Committee therefore believes that TDC Earned renders a more accurate and up-to-date reflection of its assessment of performance.

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CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(u) of Regulation S-K, TVA is providing the following information regarding the annual total compensation of TVA's CEO position and the annual total compensation of the median employee of the company:

•The total compensation for the CEO position for 2021 was $9,882,680.

•For 2021, the median employee's annual total compensation was $139,953.

Based on this information, the pay ratio of the total compensation for the CEO position to the median employee was approximately 71 to 1.

To identify the median employee and to determine the annual total compensation of the median employee, TVA took the following steps:

•TVA selected September 30, 2021, as the date on which ~~will vest~~to identify its median employee. On September 30, 2021, TVA's employee population (including full-time, part-time, and temporary employees) consisted of 10,129 individuals located in the U.S.

•After identifying its median employee, TVA calculated that employee's compensation for 2021 as though that compensation was being calculated for purposes of the Summary Compensation Table, resulting in annual total compensation of $139,953.

The above pay ratio is a reasonable estimate calculated in ~~three installments as long as Mr. Lyash remains employed~~a manner consistent with Item 402(u) of Regulation S-K. Because Item 402(u) provides companies with flexibility to select the methodology and assumptions used to identify the median employee and to calculate the pay ratio, the pay ratio reported by TVA may not be comparable to the pay ratios reported by other companies.

2021 CEO Pay Ratio Below Median Among Peers

As reflected above, TVA's CEO target TDC is low compared to its 2021 compensation peer group on an absolute basis but is also low compared to its peers in the ~~applicable vesting dates: $400,000 on September 30, 2019, $1,092,000 on September 30, 2020, and $292,000 on September 30, 2021.~~

~~TVA also provided Mr. Lyash a sign-on bonus payment~~context of ~~$380,000, which was paid upon commencement of his employment. The sign-on bonus payment must be repaid in full to TVA if, within one year~~organizational pay ratios. As discussed fully under "CEO Pay Ratio Disclosure", the pay ratio of the ~~effective date of his employment, (1) he voluntarily terminates his employment, unless the separation is for reasons beyond his control and acceptable to TVA, or (2) he is terminated for cause.~~

~~The chart below compares (i) the~~ total ~~direct~~ compensation ~~earned by Mr. Lyash for 2019; (ii) the target prorated compensation opportunity~~ for Mr. Lyash for 2019; (iii) the 2019 approved target compensation opportunity for Mr. Lyash for 2019; (iv) the total direct compensation earned by Mr. Johnson for 2019; (v) the target prorated compensation opportunity for Mr. Johnson for 2019; (vi) the 2019 approved target compensation opportunity for Mr. Johnson for 2019; and (vii) the CEO median compensation data provided to the ~~Committee by FW Cook, based~~median TVA employee was approximately 71 to 1 for 2021. Based on TVA's ~~peer group as discussed above.~~

CEO Peer Group Compensation Comparison
Compensation Component
TVA CEO
Lyash Actual Compensation for 2019

TVA CEO
Lyash Target Prorated Compensation Opportunity for 2019

TVA CEO
Lyash Target Compensation Opportunity for 2019
TVA CEO Johnson Actual Compensation for 2019 TVA CEO Johnson Target Prorated Compensation Opportunity for 2019 TVA CEO Johnson Target Compensation Opportunity for 2019
Chief Executive Officer Median Market Data⁽¹⁾
Base Salary $ 445,846
⁽²⁾
$ 445,846
⁽²⁾
$ 920,000
$ 669,038
⁽³⁾
$ 669,038
⁽³⁾
$ 1,150,000
$ 1,238,000
Total Annual Incentive 193 %
⁽⁴⁾
150 % 150 % 175 %
⁽⁵⁾
150 % 150%
123 %
Total Cash Compensation $ 1,307,815
$ 1,109,308
$ 2,300,000
$ 1,839,953
$ 1,678,447
$ 2,875,000
$ 2,773,000
Total Long-Term Incentive Compensation — % — % — % 441 %
⁽⁶⁾
391%
⁽⁷⁾
289%
⁽⁸⁾
484%
Sign-on Bonus $ 380,000
⁽⁹⁾
$ 380,000
⁽⁹⁾
$ 380,000
⁽⁹⁾
$ —
$ —
$ —
$ —
Recruitment/Relocation Incentive $ 400,000
⁽¹⁰⁾
$ 400,000
⁽¹⁰⁾
$ 400,000
⁽¹⁰⁾
$ —
$ —
$ —
$ —
Total Direct Compensation $ 2,087,815
$ 1,889,308
$ 3,080,000
$ 4,787,470
$ 4,291,467
$ 6,198,367
$ 8,709,000

~~Notes~~

~~(1) Target market assessment effective October 2018 and included market composite of Willis Towers Watson database and proxy peer group.~~

~~(2) Salary opportunity earned from April 8, 2019 through September 30, 2019.~~

~~(3) Salary opportunity earned from October 1, 2018 through May 2, 2019.~~

~~(4) Mr. Lyash's prorated EAIP Target Opportunity was $663,462. His award after applying the 1.0 Corporate Multiplier, 116% scorecard, and 112% Individual Performance Multiplier was $861,969.~~

~~(5) Mr. Johnson's prorated EAIP Target Opportunity was $1,009,409. His award after applying the 1.0 Corporate Multiplier, 116% scorecard, and 100% Individual Performance Multiplier was $1,170,915.~~

~~(6) Mr. Johnson's actual LTP award was $2,425,103~~2021 pay ratio and the ~~LTR prorated tranches were~~pay ratio disclosed in its peers' most recent public disclosures, TVA's pay ratio is below the 50th percentile. Peers used are those shown under Proxy Peer Group of Investor-Owned Utilities in the ~~amount~~List of ~~$118,018, $192,938,~~Compensation Peer Companies.

2021 CEO PAY RATIO VS. PEERS

2021 NEO Pay Decisions and ~~$211,458.~~Compensation Scorecards

~~(7) Based on a retirement date of May 2, 2019, Mr. Johnson's prorated target LTP award was $2,090,606~~The following pages show each NEO's 2021 Total Direct Compensation earned, 2021 TDC opportunities granted, and the ~~LTR prorated tranches were~~Committee's (or the CEO's in the ~~amount~~case of ~~$118,018, $192,938, and $211,458.~~NEOs other than the CEO) rationale for those pay decisions.

~~(8) For the 2017-2019 LTP performance cycle, Mr. Johnson's target LTP award was $2,427,800 and he had three LTR tranches vesting in the amounts~~

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Table of ~~$202,317, $330,750, and $362,500.~~Contents

~~(9) Mr. Lyash received a $380,000 sign-on bonus associated with his hire.~~



JEFFREY J. LYASH President and CEO Joined TVA April 2019									2021 TOTAL DIRECT COMPENSATION EARNED $7,454,730 Base Salary. Mr. Lyash's salary was increased 3.97 percent to $1,100,000 for 2021, reflecting superior performance and positioning to a more competitive base salary. This amount is below the 2021 compensation peer group median. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The TVA Board approved an Individual Performance Multiplier of 125 percent for Mr. Lyash for 2021 given his superior performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Earned. Mr. Lyash earned $754,300 in 2021 upon the vesting of the 2021 tranches of his 2020 and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Lyash was granted a 2021–2023 LTP program award with a target opportunity of $2,914,100, which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Lyash was granted a 2021 LTR program award of $1,248,900 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Lyash was paid $292,000 in 2021 as the third tranche of a deferred cash recruitment and relocation incentive under his employment offer letter. This incentive was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of substitute compensation in light of his not being eligible to earn any long-term performance incentive payments until September 2021.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •TVA has maintained its high level of service and employees continued to deliver outstanding performance in all strategic areas of the company through the COVID-19 pandemic. •Outstanding system performance experienced during the record winter storm and summer heat wave. •Effective planning and response to COVID-19 through Pandemic Response Team and union partnerships focused on enhanced safety, well-being, and communications to support the workforce. •Established an enterprise IwD to advise, champion, and oversee IwD strategies across TVA and the communities it serves. Increased diversity in leadership positions. •Developed TVA's Strategic Intent document to support internal alignment related to TVA's efforts around decarbonization and advanced innovation in energy supply. •Achieved 63% reduction in mass carbon emissions from 2005 baseline and working to obtain greater amounts of power supply from clean resources for further reductions. •Successfully facilitated the FY22 Budget Power Supply Plan. •Financial performance was strong, with debt reduced to the lowest level in 30 years, effective wholesale rates lowest in a decade, and lower interest expense in 2021 compared to 2020 mainly due to lower debt levels. •Strengthened customer relationships: 95% (145) of 153 LPCs have signed with TVA under 20-year Partnership Agreement. •The aggregate impact of these achievements was that TVA not only held rates stable and low, but returned $189 million in bill credits to LPCs participating in the long-term Partnership Agreement during 2021. •These achievements also enabled TVA to deliver a wide range of pandemic support programs to LPCs, businesses, and communities that lessened their burden and helped businesses across the Tennessee Valley recover. •Mr. Lyash's highest rated competencies were vision, innovation, and strategic direction, effective communication, and accountability and driving for results.

~~(10) Mr. Lyash received a Recruitment/Relocation Incentive~~

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Table of ~~$1,784,000 which vests in three installments - $400,000 on September 30, 2019, $1,092,000 on September 30, 2020, and $292,000 on September 30, 2021.~~Contents



JOHN M. THOMAS, III Executive Vice President and Chief Financial and Strategy Officer Joined TVA November 2005									2021 TOTAL DIRECT COMPENSATION EARNED $3,133,714 Base Salary. Mr. Thomas' salary was increased three percent to $686,582 at the beginning of 2021, reflecting strong performance and positioning to maintain a competitive base salary. Mr. Thomas’ salary was also increased 11.4 percent to $765,000 in June 2021 reflecting additional scope and responsibilities with his job title change to Executive Vice President and Chief Financial and Strategy Officer. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 105 percent for Mr. Thomas for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Awards Earned. Mr. Thomas earned $413,667 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Thomas was granted a 2021–2023 LTP program award with a target opportunity of $1,000,000. Effective June 7, 2021, Mr. Thomas was awarded a prorated 2021-2023 LTP grant of $1,039,000, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $1,000,000 made on October 1, 2020. The actual payout of the award will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Thomas was granted a 2021 LTR program award of $432,000. Effective June 7, 2021, Mr. Thomas was awarded a prorated 2021 LTR award of $441,000 which replaced the 2021 LTR program award of $432,000 made on October 1, 2020, that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Executed CFO, strategic planning, and business planning functions at an exceptionally high level, delivering results that exceeded enterprise goals in O&M expense, debt reduction, net income, and cash flow. •After assuming leadership for the Technology and Innovation units in 2020, quickly developed a comprehensive technology strategy including initiatives focused on transportation electrification, regional grid transformation, and expansion of TVA's solar power program, producing excellent 2021 results. For example, the industry-leading Green Invest Program resulted in more than 2,000 MWs of solar development across the Valley. •Continued to effectively manage revenue loss risk presented by the COVID-19 pandemic by working across the organization to manage O&M expense, adjust capital spending, and develop and extend a range of LPC and community support programs. These programs included direct fund matching to communities through the Community Care Fund and support through the Back-to-Business Credit program. •Effectively managed TVA liquidity, access to debt markets, and liability management activities to maintain TVA's strong financial position and lower interest expense. •Continued to successfully build TVA's ESG programs and communicate them effectively to stakeholders, including the financial community, executing TVA's first Investor ESG day. •Executed major bond issuance, including TVA's first ever Green Bonds that garnered the lowest 10-year rate in TVA history. •Continued to reduce TVA debt, achieving the lowest level in 30 years. •Total number of Long-Term Partnership Agreements increased in 2021, which returned $189 million to participating LPCs in 2021. •A key leader in delivering organizational financial performance that was the foundation for providing TVA customers with a 2.5% Pandemic Relief Credit on their monthly bills in 2021, and creating a Pandemic Recovery Credit of 2.5% for application throughout 2022. •Continued to mature the TVA Enterprise Risk Management Program, delivering superior risk insights contributing to material risk reduction. •In partnership with a range of internal organizations, developed and brought to the TVA Board a Carbon-informed Asset plan and a Strategic Intent and Guiding Principles Document that lay the foundation of TVA's greenhouse gas reduction glide path while maintaining low cost and high reliability.

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TIMOTHY S. RAUSCH Executive Vice President and Chief Nuclear Officer Joined TVA October 2018									2021 TOTAL DIRECT COMPENSATION EARNED $1,938,804 Base Salary. Mr. Rausch's salary was increased three percent to $551,668 for 2021, reflecting solid performance and positioning to maintain a competitive base salary. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 105 percent for Mr. Rausch for 2021 given his solid performance and notable achievements, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Payments Earned. Mr. Rausch earned $277,750 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program award. The LTR program award vests ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Rausch was granted a 2021–2023 LTP program award with a target opportunity of $500,000, which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Rausch was granted a 2021 LTR program award of $330,000 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Effectively led strong TVA nuclear fleet progress towards best-in-class operation, substantially improving nuclear fleet performance metrics and making solid progress toward the enterprise objective that all nuclear units achieve top quartile performance in 2022. •Completed 2021 with zero recordable injuries to TVA nuclear employees, effective with October 8, 2021 recorded data. •Substantially strengthened nuclear safety culture and safety conscious work environment, including improvement of Employee Concerns Program effectiveness, leadership timeliness in addressing employee issues and workforce communication that were recognized by the NRC with the closure of work environment related open concerns. •Completed the Extended Power Uprate program at Browns Ferry Nuclear Plant that increased cost effective power output by 11 percent and received nuclear industry recognition for project excellence. •Completed a broad portfolio of investments that significantly improved nuclear fleet safety and reliability. •Demonstrated nuclear value by delivering high reliability of the nuclear fleet through extreme winter weather and during the high load summer season. •Completed a series of major nuclear plant refueling outages involving thousands of workers, largely on budget and on schedule despite challenges presented by the COVID-19 pandemic. •Led a team that continued to advance the company's new nuclear program focused on deployment of light water Small Modular Reactors, which is a critical milestone in the development of this zero carbon generating resource. In addition, formed a partnership focused on development of next generation reactors including construction of a molten fluoride salt test reactor at Oak Ridge. •Championed the enterprise IwD Initiative, increasing diversity in the nuclear organization and mentoring the enterprise IwD Leadership Council.

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DAVID B. FOUNTAIN Executive Vice President and General Counsel (effective March 2021; former Senior Vice President, Vice General Counsel) Joined TVA June 2020									2021 TOTAL DIRECT COMPENSATION EARNED $1,074,607 Base Salary. Mr. Fountain’s salary was increased 3.5 percent to $465,750 at the beginning of 2021 reflecting his superior performance and positioning to maintain a competitive base salary. Mr. Fountain’s salary was also increased 15.9 percent to $540,000 in March 2021, with his selection as Executive Vice President and General Counsel. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 100 percent for Mr. Fountain for 2021 given his solid performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Award Payments Earned. Mr. Fountain did not participate in the 2019-2021 LTP program, and thus did not receive any LTP payout in 2021. Long-Term Retention Award Payments Earned. Mr. Fountain earned $105,500 in 2021 as the first tranche of his 2021 LTR program. The 2021 LTR award vests ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Fountain was granted a 2021-2023 LTP program award with a target opportunity of $375,000. Effective March 5, 2021, Mr. Fountain was awarded a prorated 2021-2023 LTP grant of $562,500, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $375,000. The actual payout of the award will depend on performance against targets at the end of a three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Fountain was granted a 2021 LTR program award of $249,000. Effective with the March 5, 2021 selection, Mr. Fountain was awarded a prorated 2021 LTR award of $316,500 which replaced the 2021 LTR program award of $249,000 made on October 1, 2020, and vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Fountain was paid $100,000 in 2021 as the second installment of a deferred cash relocation incentive under his employment offer letter and $350,000 as the second installment of a deferred cash recruitment incentive under his employment offer letter.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Effectively led the activities of the Office of the General Counsel ("OGC) across multiple areas of law, including nuclear, regulatory, commercial, environmental, litigation, employment, natural resources, and others. •Served a critical role as an insightful, strategic, and trusted advisor to the Enterprise Leadership Team and to the TVA Board. •Counseled the enterprise through a variety of novel legal challenges including challenges to the public power model established by the TVA Act and a favorable decision in the Nuclear Development lawsuit related to the disposition of the Bellefonte Nuclear Plant site. •As Corporate Secretary supported the TVA Board in developing and implementing changes intended to strengthen the company's governance and improve transparency, including restructuring Board Committees. •As Vice General Counsel, led TVA's response to Executive Orders and interactions with other federal offices that successfully resolved significant issues and built confidence and trust. •Continued to successfully support the organization in developing the basis and structure of the portfolio of COVID-19 pandemic-related programs delivered across the TVA service area. •Took significant steps to strengthen the TVA Ethics Program, including completion of a comprehensive program assessment and development of a long-term improvement plan •Successfully completed the transition of the OGC organization from the prior General Counsel, building employee confidence and engagement. •Expanded the OGC's pro-bono legal support initiative that is positively impacting lives in support of TVA's mission of service.

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DONALD A. MOUL Executive Vice President and Chief Operating Officer Joined TVA June 2021									2021 TOTAL DIRECT COMPENSATION EARNED $854,831 Base Salary. Mr. Moul’s salary was approved as $765,000 commensurate with his employment on June 21, 2021 as Executive Vice President and Chief Operating Officer. Salary earned in 2021 was $205,962. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 115 percent for Mr. Moul for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Award Payments Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Payments Earned. Mr. Moul earned $327,084 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020 and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective with his hire, Mr. Moul was granted a prorated 2021-2023 LTP program award with a target opportunity of $588,750 which will vest on September 30, 2023. The actual payout of the award will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective with his hire, Mr. Moul was granted a prorated 2021-2023 LTR program award of $588,750 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Moul was paid $650,000 in 2021 as the first installment of a deferred cash recruitment and relocation incentive under his employment offer letter.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Completed a highly successful 100-day Chief Operating Officer transition plan that maintained operational quality, built employee confidence, and effectively completed the turnover of the Chief Operating Officer position with Mr. Skaggs coincident with the end of the fiscal year. •Effectively engaged with the staff and coordinated system and river operations activities through a significant rainfall year and the highest load period in nearly a decade without customer interruption or price instability. •Quickly acclimated to the TVA organization, culture, and operation and established himself as an effective senior executive. •Completed an extensive program of customer and stakeholder outreach to establish the constructive relationships needed to effectively lead the enterprise, receiving strong positive stakeholder feedback on this critical executive turnover. •Effectively led organizational response to a series of COVID-related Executive Orders in a manner that satisfied these directives without disrupting performance. •Led the organizational response to a tragic contract employee fatality, supporting the responsible contract partner company in their investigation and ensuring that TVA learned all appropriate lessons and took timely improvement actions.

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MICHAEL D. SKAGGS Executive Vice President and Advisor to the Chief Operating Officer (effective June 2021; former Executive Vice President and Chief Operating Officer) Joined TVA February 1994									2021 TOTAL DIRECT COMPENSATION EARNED $3,335,868 Base Salary. Mr. Skaggs's salary was increased four percent to $689,936 for 2021, reflecting strong performance and positioning to maintain a competitive base salary. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVABoard approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 115 percent for Mr. Skaggs for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019-2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Awards Earned. Mr. Skaggs earned $451,000 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program awards, respectively. The LTR program awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Skaggs was granted a 2021–2023 LTP program award with a target opportunity of $1,175,000 which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Skaggs was granted a 2021 LTR program award of $504,000 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Led the operational teams to the best industrial safety performance in TVA history for the second consecutive year, with top quartile Serious Injury Rate and top decile OSHA Injury Rate. •Provided exceptional reliability during two extreme cold and heat-related weather events, delivering high generating station performance, strong transmission system performance, and outstanding system management. •In partnership with a range of internal organizations, developed and brought to the TVA Board a Carbon-informed Asset plan and a Strategic Intent and Guiding Principles Document that lay the foundation of TVA's greenhouse gas reduction glide path while maintaining low cost and high reliability. •Continuously improved transmission reliability in 2021, again setting industry performance standards, and resulting in more reliable and higher-quality power delivery to industrial customers, LPCs, and communities. •Led significant improvement of non- nuclear generation fleet performance in 2021, exceeding aggressive goals and contributing to lower fuel costs and considerable savings to customers. •Progressed the Grid of Tomorrow program, which is focused on building the integrated energy system of the future, on schedule and on budget. •Continued to build TVA's ESG program and issued TVA's second Sustainability Report, clearly communicating TVA's leadership position in this important dimension of corporate stewardship. •Led improvement efforts for critical support functions of supply chain, environmental programs, and security. •Evaluated, assisted in lessons learned incorporation, and provided meaningful mentorship for the Watts Bar Unit 2 Nuclear Plant Steam Generator Project. •Advised the TVA nuclear team in developing the Small Modular Reactor program, a key to achieving future carbon reduction goals.

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Executive Compensation Tables and Narrative Disclosures

Summary Compensation and Grants of Plan-Based Awards

The following table provides information on compensation earned by each of the ~~Named Executive Officers~~NEOs in ~~2019~~2021 (and ~~2018~~2020 and ~~2017,~~2019, as applicable).

SUMMARY COMPENSATION TABLE


Name and Principal Position	Year	Salary		Bonus(1)		Non-Equity Incentive Plan Compensation(2)			Change in Pension Value and Nonqualified Deferred Compensation Earnings(3)			All Other Compensation(4)		Total
Jeffrey J. Lyash	2021	$	1,100,000	$	—	$	6,354,730		$	2,110,300		$	317,650	$	9,882,680
President and Chief	2020	1,058,000		—		2,729,609		(5)	2,271,647		(6)	1,237,977		7,297,233
Executive Officer	2019	445,846		380,000		861,969		(7)	5,970,873		(8)	504,835		8,163,523
John M. Thomas, III	2021	$	710,711	$	—	$	2,423,003		$	767,504		$	21,375	$	3,922,593
Executive Vice President and	2020	666,584		—		2,210,410		(9)	980,220		(10)	21,000		3,878,214
Chief Financial and Strategy Officer	2019	648,208		52,500		1,804,797		(11)	1,076,752		(12)	20,625		3,602,882
Timothy Rausch	2021	$	551,668	$	—	$	1,387,136		$	237,895		$	25,650	$	2,202,349
Senior Vice President	2020	535,600		—		1,031,390		(13)	106,428		(14)	159,794		1,833,212
and Chief Nuclear Officer	2019	502,000		—		713,750		(15)	72,784		(16)	255,735		1,544,269
David Fountain	2021	$	507,444	$	—	$	567,163		$	4,167		$	479,295	$	1,558,069
Executive Vice President	2020	—		—		—			—			—		—
and General Counsel	2019	—		—		—			—			—		—
Donald Moul	2021	$	205,962	$	—	$	648,869		$	—		$	678,098	$	1,532,929
Executive Vice President	2020	—		—		—			—			—		—
and Chief Operating Officer	2019	—		—		—			—			—		—
Mike D. Skaggs	2021	$	689,936	$	—	$	2,645,932		$	1,223,557		$	12,825	$	4,572,250
Executive Vice President	2020	663,400		—		2,150,295		(17)	1,609,999		(18)	12,600		4,436,294
and Advisor to the CEO	2019	614,692		52,500		1,716,194		(19)	2,017,130		(20)	12,375		4,412,891

Summary Compensation Table
Name and Principal Position Year Salary
Bonus⁽¹⁾

Non-Equity Incentive Plan Compensation⁽²⁾
Change in Pension Value and
Nonqualified Deferred Compensation Earnings⁽³⁾
All Other Compensation⁽⁴⁾
Total
Jeffrey J. Lyash 2019 $ 445,846
$ 380,000
$ 861,969
$ 5,970,873
$ 504,835
$ 8,163,523
President and Chief
Executive Officer

William D. Johnson, Retired 2019 $ 669,038
$ 146,342
$ 3,972,090
$ 2,115,149
$ 33,000
$ 6,935,619
President and Chief 2018 1,052,115
—
5,726,830
⁽⁵⁾
1,303,293
⁽⁶⁾
32,400
8,114,638
Executive Officer 2017 995,000
—
4,075,857
⁽⁷⁾
1,556,084
⁽⁸⁾
31,800
6,658,741

John M. Thomas, III 2019 $ 648,208
$ 52,500
$ 1,804,797
$ 1,076,752
$ 20,625
$ 3,602,882
Executive Vice President 2018 629,023
—
1,692,318
⁽⁹⁾
173,723
⁽¹⁰⁾
20,250
2,515,314
and Chief Financial Officer 2017 610,018
—
1,406,637
⁽¹¹⁾
294,108
⁽¹²⁾
19,875
2,330,638

Mike D. Skaggs 2019 $ 614,692
$ 52,500
$ 1,716,194
$ 2,017,130
$ 12,375
$ 4,412,891
Executive Vice President 2018 520,951
—
1,422,133
⁽¹³⁾
320,678
⁽¹⁴⁾
12,150
2,275,912
and Chief Operating Officer 2017 495,285
—
1,000,578
⁽¹⁵⁾
352,167
⁽¹⁶⁾
11,925
1,859,955

Sherry A. Quirk 2019 $ 540,751
$ 47,250
$ 1,441,756
$ 401,540
$ 24,750
$ 2,456,047
Executive Vice President 2018 511,254
—
1,288,900
⁽¹⁷⁾
207,166
⁽¹⁸⁾
24,300
2,031,620
and General Counsel 2017 477,405
—
993,725
⁽¹⁹⁾
138,629
⁽²⁰⁾
23,850
1,633,609

Timothy Rausch 2019 $ 502,000
$ —
$ 713,750
$ 72,784
$ 255,735
$ 1,544,269
Senior Vice President
and Chief Nuclear Officer
Notes

~~Note~~(1) There were no bonus awards in 2021.

~~(1)~~ (2) The ~~2019~~2021 data is outlined in the table below.

NON-EQUITY INCENTIVE PLAN COMPENSATION

Bonus

Jeffrey J.
Lyash
William D. Johnson John M. Thomas, III Michael D. Skaggs
Sherry A.
Quirk

Timothy
Rausch
LTP Scorecard Adjustment $ —
$ 146,342
$ 52,500
$ 52,500
$ 47,250
$ —
Sign-on Bonus 380,000

—

—

—

—

—
Total $ 380,000
$ 146,342
$ 52,500
$ 52,500
$ 47,250
$ —


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain		Donald Moul		Michael D. Skaggs
EAIP	$	2,928,750	$	847,736	$	575,776	$	461,663	$	235,435	$	901,332
LTP	2,671,680		1,161,600		533,610		—		86,350		1,293,600
LTR 2019-03(A)	—		126,667		57,750		—		21,806		140,000
LTR 2020-02(B)	338,000		140,000		110,000		—		109,028		143,000
LTR 2021-01(C)	416,300		147,000		110,000		105,500		196,250		168,000

Total	$	6,354,730	$	2,423,003	$	1,387,136	$	567,163	$	648,869	$	2,645,932

Notes

~~(2) The 2019 data is outlined in the table below.~~

Non-Equity Incentive Plan Compensation

Jeffrey J.
Lyash
William D. Johnson John M. Thomas, III Michael D. Skaggs
Sherry A.
Quirk

Timothy
Rausch
EAIP $ 861,969
$ 1,170,915
$ 660,630
$ 575,360
$ 439,340
$ 406,000
LTP —
2,278,761
817,500
817,500
735,750
—

LTR 2016-03^(A)
—
118,018
83,334
83,334
75,000
—

LTR 2017-02^(B)
—
192,938
116,667
100,000
95,000
—

LTR 2018-01^(C)
—
211,458
126,666
140,000
96,666
57,750
Performance Incentive Arrangement ("PIA") —
—
—
—
—
250,000
Total $ 861,969
$ 3,972,090
$ 1,804,797
$ 1,716,194
$ 1,441,756
$ 713,750

~~Note~~

(A) LTR grant representing the third tranche of the LTR award effective October 1, ~~2016.~~2018.

(B) LTR grant representing the second tranche of the LTR award effective October 1, ~~2017.~~2019.

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(3) The ~~2019~~2021 data is outlined in the table below.

Change in Pension Value and Nonqualified Deferred Compensation Earnings

Jeffrey J.
Lyash
William D. Johnson John M. Thomas, III Michael D. Skaggs
Sherry A.
Quirk

Timothy
Rausch
Increase under TVARS Plans $ —
$ 77,561
$ 60,304
$ 91,600
$ —
$ —
Increase under SERP 5,970,873
2,037,588
1,016,448
1,925,530
401,540
72,784
Total $ 5,970,873
$ 2,115,149
$ 1,076,752
$ 2,017,130
$ 401,540
$ 72,784
CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain		Donald Moul		Michael D. Skaggs
Increase under TVARS Plans	$	—	$	17,652	$	—	$	—	$	—	$	41,797
Increase under SERP	2,110,300		749,852		237,895		4,167		—		1,181,760
Total	$	2,110,300	$	767,504	$	237,895	$	4,167	$	—	$	1,223,557

(4) The ~~2019~~2021 data is outlined in the table below.

All Other Compensation

Jeffrey J.
Lyash
William D. Johnson John M. Thomas, III Michael D. Skaggs
Sherry A.
Quirk

Timothy
Rausch
401(k) Matching Contribution $ 12,375
$ 16,500
$ 12,375
$ 12,375
$ 12,375
$ 12,375
Non-Elective 401(k) Contribution 12,375
16,500
8,250
—
12,375
12,375
Recruitment/Relocation Incentive 400,000
—
—
—
—
200,000
Relocation Benefits 80,085
—
—
—
—
30,985
Total $ 504,835
$ 33,000
$ 20,625
$ 12,375
$ 24,750
$ 255,735
ALL OTHER COMPENSATION


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain			Donald Moul			Michael D. Skaggs
401(k) Matching Contribution	$	12,825	$	12,825	$	12,825	$	12,825		$	7,944		$	12,825
Non-Elective 401(k) Contribution	12,825		8,550		12,825		12,825			9,268			—
Deferred Cash Recruitment/Relocation Incentive	292,000		—		—		450,000		(A)	650,000		(B)	—
Relocation Benefits	—		—		—		3,645			10,886			—
Total	$	317,650	$	21,375	$	25,650	$	479,295		$	678,098		$	12,825

Notes

(A) Under the terms of his offer letter, Mr. Fountain is required to repay to TVA deferred cash relocation incentive payments in the amount of $150,000 if, prior to June 1, 2022, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) he is terminated for cause. In addition, Mr. Fountain is required to repay to TVA deferred cash relocation incentive payments in the amount of $100,000 if, prior to June 1, 2023, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) he is terminated for cause.

(B) Under the terms of his offer letter, Mr. Moul is required to repay to TVA deferred cash recruitment and relocation incentive payments in the amount of $650,000 if, prior to June 21, 2023, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) he is terminated for cause.

(5) Represents ~~$2,354,625~~$2,391,609 awarded under the EAIP ~~$2,450,088~~and $338,000 awarded under the ~~LTIP, $722,117 awarded under LTR, and $200,000 awarded as a performance incentive arrangement ("PIA").~~LTR.

(6) Reflects ~~increases~~increase of ~~$2,969 under the Cash Balance Pension and $1,300,324~~$2,271,647 under the SERP.

(7) Represents ~~$1,691,003~~$861,969 awarded under the ~~EAIP, $1,793,488 awarded under the ELTIP, $391,366 awarded under the LTR, and $200,000 awarded as a PIA.~~EAIP.

(8) Reflects ~~increases~~increase of ~~$3,588 under the Cash Balance Pension and $1,552,496~~$5,970,873 under the SERP.

(9) Represents ~~$653,452~~$730,576 awarded under the EAIP, ~~$772,200~~$1,096,500 awarded under the ~~LTIP,~~LTP, and ~~$266,666~~$383,334 awarded under the LTR.

(10) Reflects increases of ~~$27,604~~$34,401 under the Cash Balance Pension and ~~$146,119~~$945,819 under the SERP.

(11) Represents ~~$502,654~~$660,630 awarded under the EAIP, ~~$753,983~~$817,500 awarded under the ~~ELTIP,~~LTP, and ~~$150,000~~$326,667 awarded under the LTR.

(12) Reflects increases of ~~$15,312~~$60,304 under the Cash Balance Pension and ~~$278,796~~$1,016,448 under the SERP.

(13) Represents ~~$540,800~~$513,640 awarded under the EAIP, ~~$648,000~~$167,750 awarded under the ~~LTIP,~~LTR, and ~~$233,333~~$350,000 awarded under ~~the LTR.~~a Performance Incentive Arrangement.

(14) Reflects ~~increases~~increase of ~~$49,607 under the Cash Balance Pension and $271,071~~$106,428 under the SERP.

(15) Represents ~~$408,115~~$406,000 awarded under the EAIP, ~~$459,130~~$57,750 awarded under the ~~ELTIP,~~LTR, and ~~$133,333~~$250,000 awarded under ~~the LTR.~~a Performance Incentive Arrangement.

(16) Reflects ~~increases~~increase of ~~$37,091 under the Cash Balance Pension and $315,076~~$72,784 under the SERP.

(17) Represents ~~$464,100~~$799,795 awarded under the EAIP, ~~$604,800~~$967,500 awarded under the ~~LTIP,~~LTP, and ~~$220,000~~$383,000 awarded under the LTR.

(18) Reflects ~~an increase~~increases of ~~$207,166~~$55,129 under the Cash Balance Pension and $1,554,870 under the SERP.

(19) Represents ~~$344,210~~$575,360 awarded under the EAIP, ~~$524,515~~$817,500 awarded under the ~~ELTIP,~~LTP, and ~~$125,000~~$323,334 awarded under the LTR.

(20) Reflects ~~an increase~~increases of ~~$138,629~~$91,600 under the Cash Balance Pension and $1,925,530 under the SERP.

The following table provides information on non-equity incentive plan opportunities and grants provided to NEOs and the possible range of payouts associated with the opportunities and grants. Awards under the EAIP, LTP, ~~LTR,~~ and ~~PIA~~LTR that vested as of September 30, ~~2019,~~2021, will be paid in cash during the first quarter of ~~2020.~~2022.

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Grants of Plan-Based Awards Table
as of September 30, 2019

Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards⁽¹⁾

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards⁽¹⁾

Current Year Future Years

Name

Plan
Threshold⁽²⁾
Target⁽²⁾
Maximum⁽²⁾

Threshold⁽²⁾
Target⁽²⁾
Maximum⁽²⁾
Performance Period Ending/Vesting Date
Jeffrey J. Lyash
EAIP⁽³⁾
$ 331,731
$ 663,462
$ 995,193
9/30/2019

LTP 2018⁽⁷⁾
$ 1,012,000
2,024,000
3,036,000
⁽¹³⁾
9/30/2021

William D. Johnson
EAIP⁽³⁾
$ 504,705
$ 1,009,409
$ 1,514,114
9/30/2019

LTP 2016⁽⁴⁾
1,045,303
2,090,606
3,135,909
⁽⁸⁾
9/30/2019

LTR 2016-03⁽⁵⁾
118,018
118,018
⁽⁹⁾
9/30/2019

LTR 2017-02⁽⁵⁾
192,938
192,938
⁽¹⁰⁾
9/30/2019

LTR 2018-01⁽⁵⁾
211,458
211,458
⁽¹¹⁾
9/30/2019

LTP 2017⁽⁶⁾

$ 610,969
$ 1,221,938
$ 1,832,907
⁽¹⁴⁾
9/30/2020

LTP 2018⁽⁷⁾

246,702
493,403
740,105
⁽¹⁵⁾
9/30/2021

John M. Thomas, III
EAIP⁽³⁾
$ 258,868
$ 517,735
$ 776,603
9/30/2019

LTP 2016⁽⁴⁾
375,000
750,000
1,125,000
9/30/2019

LTR 2016-03⁽⁵⁾
83,334
83,334
9/30/2019

LTR 2017-02⁽⁵⁾
116,667
116,667
9/30/2019

LTR 2018-01⁽⁵⁾
126,666
126,666
9/30/2019

LTP 2017⁽⁶⁾
$ 425,000
$ 850,000
$ 1,275,000
9/30/2020

LTR 2017-03⁽⁵⁾
116,667
116,667
9/30/2020

LTR 2018-02⁽⁵⁾

126,667
126,667
9/30/2020

LTP 2018⁽⁷⁾
440,000
880,000
1,320,000
9/30/2021

LTR 2018-03⁽⁵⁾
126,667
126,667
9/30/2021

Michael D. Skaggs
EAIP⁽³⁾
$ 248,000
$ 496,000
$ 744,000
9/30/2019

LTP 2016⁽⁴⁾
375,000
750,000
1,125,000
9/30/2019

LTR 2016-03⁽⁵⁾
83,334
83,334
9/30/2019

LTR 2017-02⁽⁵⁾
100,000
100,000
9/30/2019

LTR 2018-01⁽⁵⁾
140,000
140,000
9/30/2019

LTP 2017⁽⁶⁾
$ 375,000
$ 750,000
$ 1,125,000
9/30/2020

LTR 2017-03⁽⁵⁾
100,000
100,000
9/30/2020

LTR 2018-02⁽⁵⁾
140,000
140,000
9/30/2020

LTP 2018⁽⁷⁾
490,000
980,000
1,470,000
9/30/2021

LTR 2018-03⁽⁵⁾

140,000
140,000
9/30/2021

Sherry A. Quirk
EAIP⁽³⁾
$ 189,371
$ 378,741
$ 568,112
9/30/2019

LTP 2016⁽⁴⁾
$ 337,500
$ 675,000
$ 1,012,500
9/30/2019

LTR 2016-03⁽⁵⁾
$ 75,000
$ 75,000
9/30/2019

LTR 2017-02⁽⁵⁾
$ 95,000
$ 95,000
9/30/2019

LTR 2018-01⁽⁵⁾
$ 96,666
$ 96,666
9/30/2019

LTP 2017⁽⁶⁾
$ 337,500
$ 675,000
$ 1,012,500
9/30/2020

LTR 2017-03⁽⁵⁾
95,000
95,000
9/30/2020

LTR 2018-02⁽⁵⁾
96,667
96,667
9/30/2020

LTP 2018⁽⁷⁾
342,500
685,000
1,027,500
9/30/2021

LTR 2018-03⁽⁵⁾

96,667
96,667
9/30/2021

Timothy Rausch
EAIP⁽³⁾
$ 175,000
$ 350,000
$ 525,000
9/30/2019
PIA 2019 250,000
⁽¹²⁾
9/30/2019

LTR 2018-01⁽⁵⁾
57,750
57,750
9/30/2019

LTR 2018-02⁽⁵⁾
$ 57,750
$ 57,750
9/30/2020
PIA 2019 350,000
⁽¹²⁾
9/30/2020

LTP 2018⁽⁷⁾
$ 202,125
404,250
606,375
9/30/2021

LTR 2018-03⁽⁵⁾
57,750
57,750
9/30/2021

GRANTS OF PLAN-BASED AWARDS TABLE

as of September 30, 2021


			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)							Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
			Current Year							Future Years
Name	Plan		Threshold(2)		Target(2)		Maximum(2)			Threshold(2)		Target(2)		Maximum(2)			Performance Period Ending/Vesting Date
Jeffrey J. Lyash	EAIP	(3)	$	825,000	$	1,650,000	$	2,475,000									9/30/2021
	LTP 2019	(4)	1,012,000		2,024,000		3,036,000										9/30/2021
	LTR 2020-02	(5)			338,000		338,000										9/30/2021
	LTR 2021-01	(5)			416,300		416,300										9/30/2021
	LTP 2020	(6)								$	1,170,500	$	2,341,000	$	3,511,500		9/30/2022
	LTR 2020-03	(5)										338,000		338,000			9/30/2022
	LTR 2021-02	(5)										416,300		416,300			9/30/2022
	LTP 2021	(7)								1,457,050		2,914,100		4,371,150			9/30/2023
	LTR 2021-03	(5)										416,300		416,300			9/30/2023

John M. Thomas, III	EAIP	(3)	$	284,284	$	568,568	$	852,852									9/30/2021
	LTP 2019	(4)	440,000		880,000		1,320,000										9/30/2021
	LTR 2019-03	(5)			126,667		126,667										9/30/2021
	LTR 2020-02	(5)			140,000		140,000										9/30/2021
	LTR 2021-01	(5)			147,000		147,000										9/30/2021
	LTP 2020	(6)								$	490,000	$	980,000	$	1,470,000		9/30/2022
	LTR 2020-03	(5)										140,000		140,000			9/30/2022
	LTR 2021-02	(5)										147,000		147,000			9/30/2022
	LTP 2021	(7)								519,500		1,039,000		1,558,500			9/30/2023
	LTR 2021-03	(5)										147,000		147,000			9/30/2023


Timothy Rausch	EAIP	(3)	$	193,084	$	386,168	$	579,252									9/30/2021
	LTP 2019	(4)	202,125		404,250		606,375										9/30/2021
	LTR 2019-03	(5)			57,750		57,750										9/30/2021
	LTR 2020-02	(5)			110,000		110,000										9/30/2021
	LTR 2021-01	(5)			110,000		110,000										9/30/2021
	LTP 2020	(6)								$	250,000	$	500,000	$	750,000		9/30/2022
	LTR 2020-03	(5)										110,000		110,000			9/30/2022
	LTR 2021-02	(5)										110,000		110,000			9/30/2022
	LTP 2021	(7)								250,000		500,000		750,000			9/30/2023
	LTR 2021-03	(5)										110,000		110,000			9/30/2023


David Fountain	EAIP	(3)	$	162,557	$	325,114	$	487,672									9/30/2021
	LTR 2021-01	(5)			105,500		105,500										9/30/2021
	LTP 2020	(6)								$	187,500	$	375,000	$	562,500		9/30/2022
	LTR 2021-02	(5)										105,500		105,500			9/30/2022
	LTP 2021	(7)								281,250		562,500		843,750			9/30/2023
	LTR 2021-03	(5)										105,500		105,500			9/30/2023






Donald Moul	EAIP	(3)	$	72,087	$	144,173	$	216,260									9/30/2021
	LTP 2019	(4)	32,709		65,417		98,126		(8)								9/30/2021
	LTR 2019-03	(5)			21,806		21,806		(9)								9/30/2021
	LTR 2020-02	(5)			109,028		109,028		(10)								9/30/2021
	LTR 2021-01	(5)			196,250		196,250		(11)								9/30/2021
	LTP 2020	(6)								$	163,542	$	327,083	$	490,625	(12)	9/30/2022
	LTR 2020-03	(5)										109,028		109,028		(10)	9/30/2022
	LTR 2021-02	(5)										196,250		196,250		(11)	9/30/2022
	LTP 2021	(7)								294,375		588,750		883,125		(13)	9/30/2023
	LTR 2021-03	(5)										196,250		196,250		(11)	9/30/2023

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Michael D. Skaggs	EAIP	(3)	$	275,975	$	551,949	$	827,924							9/30/2021
	LTP 2019	(4)	490,000		980,000		1,470,000								9/30/2021
	LTR 2019-03	(5)			140,000		140,000								9/30/2021
	LTR 2020-02	(5)			143,000		143,000								9/30/2021
	LTR 2021-01	(5)			168,000		168,000								9/30/2021
	LTP 2020	(6)							$	495,000	$	990,000	$	1,485,000	9/30/2022
	LTR 2020-03	(5)									143,000		143,000		9/30/2022
	LTR 2021-02	(5)									168,000		168,000		9/30/2022
	LTP 2021	(7)							587,500		1,175,000		1,762,500		9/30/2023
	LTR 2021-03	(5)									168,000		168,000		9/30/2023

Notes

(1) TVA does not have any equity securities and therefore has no equity-based awards.

(2) Threshold, Target, and Maximum represent amounts that could be earned by aan NEO based on performance during the applicable performance cycle. Threshold, Target, and Maximum targets for EAIP and LTIP are 50 percent, 100 percent, and 150 percent.

(3) Target incentive opportunities as a percentage of salaries were as follows: Mr. Lyash, 150 percent; Mr. ~~Johnson, 150 percent; Mr.~~ Thomas, 80 percent; Mr. ~~Skaggs, 80~~Rausch, 70 percent; ~~Ms. Quirk,~~Mr. Fountain, 70 percent; Mr. Moul, 70 percent; and Mr. ~~Rausch, 70~~Skaggs, 80 percent. Additionally, a corporate multiplier ranging between 0.00 and 1.00 may be applied which can reduce the award to $0. An individual performance multiplier of up to ~~125~~150 percent may also be applied which may increase the award to ~~187.5~~

225 percent of target. Actual EAIP awards earned for performance in ~~2019~~2021 are reported for each of the NEOs under the ~~“Non-Equity~~"Non-Equity Incentive Plan ~~Compensation”~~Compensation" column in the Summary Compensation Table. See Compensation Discussion and Analysis for a discussion of how each award was determined. Mr. ~~Lyash, Mr. Johnson,~~Thomas and Mr. ~~Rausch did not work a full year and their~~Fountain's target incentive opportunities are prorated based on the number of days worked in each position during the performance cycle. ~~Details~~Mr. Moul did not work a full year, and his target incentive opportunity is prorated based on the numbers of ~~the prorated target amounts are explained~~days worked in the performance cycle.

(4) Mr. Lyash's LTP award was granted October 1, 2019, ~~EAIP Payouts in the Compensation Discussion~~ and ~~Analysis.~~

~~(4)~~vested September 30, 2021. Mr. Moul's LTP award was granted as part of his employment offer and vested September 30, 2021. All other LTP awards were granted October 1, ~~2016,~~2018, and vested September 30, ~~2019.~~2021. At the end of the performance period, TVA's LTIP Scorecard was applied to the grants in order to determine award payouts. ~~The amount of the award payout based on the calculated scorecard is~~Award payouts are reported for each of the NEOs under the ~~“Non-Equity~~"Non-Equity Incentive Plan ~~Compensation”~~Compensation" column in the Summary Compensation Table. ~~The LTP Scorecard Adjustment is reported~~Mr. Fountain did not participate in the "Bonus" column in the Summary Compensation Table. In the case of death, the beneficiary will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant’s death. Disability awards will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant’s separation from service due to disability.2019-2021 LTP program.

(5) All LTR awards will be paid in a lump sum within two months of the September 30th vesting date. The awards will be paid in cash after deducting applicable federal, state, and local withholding taxes. In the case of death, the beneficiary will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the ~~participant’s~~participant's death. Disability awards will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the ~~participant’s~~participant's separation from service due to disability. Actual LTR awards earned in ~~2019~~2021 are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

(6) Mr. Fountain's LTP award was granted as part of his employment offer and will vest September 30, 2022. Mr. Moul's LTP award was granted as part of his employment offer and will vest September 30, 2022. All other LTP awards were granted effective October 1, ~~2017,~~2019 and will vest September 30, 2022. At the end of the performance period, TVA's LTIP Scorecard will be applied to the grants in order to determine award payouts. The final award may be adjusted by the TVA Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(7) Mr. Moul's LTP award was granted as part of his employment offer and will vest September 30, 2023. All other LTP awards were originally granted October 1, 2020, and will vest September 30, 2023. Effective March 5, 2021, Mr. Fountain was awarded a prorated 2021-2023 LTP grant of $562,500, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $375,000 made on October 1, 2020. In addition, effective June 7, 2021, Mr. Thomas was awarded a prorated 2021-2023 LTP grant of $1,039,000, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $1,000,000 made on October 1, 2020. At the end of the performance period, TVA's LTIP Scorecard will be applied to the grants in order to determine award payouts. The final award may be adjusted by the TVA Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(7) LTP awards were granted October 1, 2018, and will vest September 30, 2021. At the end of the performance period, TVA's LTIP Scorecard will be applied to the grants in order to determine award payouts. The final award may be adjusted by the Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(8) Reflects prorated amount of ~~31/36ths~~3/36th of ~~initial $2,427,800~~the target grant ~~based on Mr. Johnson’s retirement date~~amount of ~~May 2, 2019.~~$785,000 for the 2019-2021 LTP performance cycle.

(9) Reflects prorated amount of ~~7/12ths~~3/36th of ~~$202,317 tranche vesting September 30, 2019, based on Mr. Johnson’s retirement date~~the LTR grant of ~~May 2, 2019.~~$785,000 for the 2019-2021 retention cycle.

(10) Reflects prorated amount of ~~7/12ths~~15/36th of ~~$330,750 tranche vesting September 30, 2019, based on Mr. Johnson’s retirement date~~the LTR grant of ~~May 2, 2019.~~$785,000 for the 2020-2022 retention cycle.

(11) Reflects prorated amount of ~~7/12ths of $362,500 tranche vesting September 30, 2019, based on Mr. Johnson’s retirement date of May 2, 2019.~~

(12) Reflects the maximum award Mr. Rausch was eligible to receive under a Performance Incentive Arrangement (“PIA”). The actual award to be paid to Mr. Rausch is reported in the “Non-Equity Incentive Plan Compensation” column27/36th of the ~~Summary Compensation Table.~~

~~(13) Mr. Lyash’s employment offer includes a LTP~~LTR grant of ~~$2,024,000 effective October 1, 2019. Although this grant was not effective in FY 2019, it is included in this table as it is a compensation obligation.~~$785,000 for the 2021-2023 retention cycle.

~~(14)~~ (12) Reflects prorated amount of ~~19/36ths~~15/36th of ~~initial $2,315,250~~the target grant ~~based on Mr. Johnson’s retirement date~~amount of ~~May 2, 2019.~~$785,000 for the 2020-2022 LTP performance cycle.

~~(15)~~ (13) Reflects prorated amount of ~~7/36ths~~27/36th of ~~initial $2,537,500~~the target grant ~~based on Mr. Johnson’s retirement date~~amount of ~~May 2, 2019.~~$785,000 for the 2021-2023 LTP performance cycle.

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Retirement and Pension Plans

The table below provides the actuarial present value of the ~~Named Executive Officers'~~NEOs' accumulated benefits, including the number of years of credited service, under TVA's retirement and pension plans as of September 30, ~~2019,~~2021, determined using a methodology and interest rate and mortality rate assumptions consistent with those used in the financial statements in this Annual Report, set forth in Note 21 22 —Benefit Plans.

Pension Benefits Table

Name

Plan Name
Number of
Years of Credited Service⁽¹⁾
Present Value of Accumulated Benefit

Payments During Last Year
Jeffrey J. Lyash TVARS N/A N/A
⁽⁵⁾
$ —
SERP Tier 1 10.417
⁽²⁾
$ 5,970,873
—
William D. Johnson TVARS 6.333
⁽³⁾
152,692
2,790
SERP Tier 1 12.333
⁽³⁾
7,862,385
2,053,334
John M. Thomas, III TVARS 13.833 377,548
—
SERP Tier 1 13.833 3,689,040
—
Michael D. Skaggs TVARS 25.583 717,549
—
SERP Tier 1 24.000
⁽⁴⁾
6,339,127
—
Sherry A. Quirk TVARS N/A N/A
⁽⁵⁾
—
SERP Tier 1 4.583 749,598
—
Timothy Rausch TVARS N/A N/A
⁽⁵⁾
—
SERP Tier 2 0.917 72,784
—
PENSION BENEFITS TABLE


Name	Plan Name	Number of Years of Credited Service(1)		Present Value of Accumulated Benefit			Payments During Last Year
Jeffrey J. Lyash	TVARS	N/A		N/A		(3)	$	—
	SERP Tier 1	12.417	(2)	$	10,352,820		—
John M. Thomas, III	TVARS	15.833		429,601			—
	SERP Tier 1	15.833		5,384,711			—
Timothy Rausch	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	2.917		417,107			—
David Fountain	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	1.333		4,167			—
Donald Moul	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	0.250		—			—
Michael D. Skaggs	TVARS	27.583		814,475			—
	SERP Tier 1	24.000	(4)	9,075,757			—

Notes

(1) Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below.

(2) Mr. Lyash was granted five years of credited service for calculating his SERP benefit. In the event of involuntary termination except for cause prior to five years of actual service, the vesting requirement will be waived, and he will be entitled to the additional five years of granted credited service plus his actual years of service for calculating his SERP benefit. In the event of termination for cause or voluntary termination for any reason prior to five years of actual service, the vesting requirement will be waived and his SERP benefit will be calculated based on a total of five years of credited service. After five years of actual service with TVA, he will be granted five additional years of credited service for a total of 15 years of credited service for calculating his SERP benefit. As of September 30, ~~2019,~~2021, Mr. Lyash had ~~.417~~2.417 years of service. The ~~Present Value~~present value of the ~~Accumulated~~accumulated SERP benefit with ~~5.417~~7.417 years of credited services is $6,156,339. The present value of the accumulated SERP benefit with 12.417 years of credited service is ~~$3,049,044. The Present Value of the Accumulated SERP benefit with 10.417 years of credited service is $5,970,873. This number is reported in the Summary Compensation Table.~~$10,352,820.

(3) Mr. Johnson was granted five additional years of credited service for pre-TVA employment because he was employed with TVA for at least five years and satisfied the minimum five-year vesting requirement; therefore, the offset for prior employer pension benefits associated with the additional five years of credited service was waived. 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 Cash Balance Pension taking into account the additional years of credited service being used for SERP benefit calculation purposes. In December 2016, the TVA Board approved amendments to Mr. Johnson’s compensation arrangements to provide, among other things, that if Mr. Johnson remained with TVA through calendar year 2018, his SERP benefit would be based on 12 years credited service (six credited years and six actual years).

~~(4) Mr. Skaggs has reached the 24 year service cap allowed under the Plan.~~

~~(5)~~ Mr. Lyash, ~~Ms. Quirk,~~Mr. Rausch, Mr. Fountain, and Mr. ~~Rausch~~Moul are not eligible to participate in the TVARS Pension Plan since they were hired after June 30, 2014.

(4) Mr. Skaggs has reached the 24-year service cap allowed under the SERP.

Qualified Retirement Plans

The retirement benefits for which employees are eligible and receive under the TVARS pension plan and 401(k) plan depend on the employee's hire date, years of service, and individual elections, as follows:

•Employees who were first hired prior to January 1, 1996, receive (i) a traditional pension benefit calculated based on the employee's creditable service, the employee's average monthly salary for the highest three consecutive years of eligible compensation, and a pension factor based on the employee's age and years of service, less a Social Security offset, and (ii) 401(k) plan matching contributions from TVA. The 401(k) plan matching contribution is $0.25 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 1.5 percent of eligible compensation. None of the ~~Named Executive Officers~~NEOs are in this group.

•Employees who were first hired prior to January 1, 1996, and who elected to switch pension structures from traditional to cash balance, receive (i) a cash balance pension benefit calculated based on (a) pay-based credits and interest that accrue over time in the employee's account and (b) the employee's age at the time of retirement, and (ii) 401(k) plan matching contributions from TVA. The monthly pay credits are equal to six percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the change in the CPI-U plus three percent (with a minimum of six percent and maximum of 10 percent). The interest rate during ~~2019~~2021 was six percent. The 401(k) plan matching contribution is $0.75 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation.

Mr. Skaggs is in this group.

•Employees who were first hired on or after January 1, 1996, and who had 10 or more years of service as of October 1, 2016, receive (i) a cash balance pension benefit calculated based on (a) pay-based credits and interest that accrue over time in the employee's account and (b) the employee's age at the time of retirement, and (ii) 401(k) plan non-elective and matching contributions from TVA. The monthly pay credits are equal to three percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the change in the CPI-U plus two percent (with a minimum of 4.75 percent and a

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maximum of 6.25 percent). The interest rate during ~~2019~~2021 was 4.75 percent. The 401(k) plan automatic, non-elective contribution is equal to three percent of eligible compensation, and the matching contribution is $0.75 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation. Mr. Thomas is in this group.

•Employees who were first hired on or after January 1, 1996, and who had less than 10 years of service as of October 1, 2016, receive (i) a cash balance pension benefit calculated based on pay-based credits and interest that accrue over time in the employee's account and the employee's age at the time of retirement, and (ii) 401(k) plan non-elective and matching contributions from TVA. As of October 1, 2016, the cash balance accounts of these employees receive no additional pay-based credits; however, the accounts continue to receive monthly interest credits at an annual interest rate equal to the change in the CPI-U plus two percent (with a minimum of 4.75 percent and a maximum of 6.25 percent). The interest rate during ~~2019~~2021 was 4.75 percent. The 401(k) plan automatic, non-elective contribution is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of eligible compensation, for a maximum matching contribution of six percent of eligible compensation. ~~Mr. Johnson was~~None of the NEOs are in this group.

•Employees who were hired prior to July 1, 2014, and who elected to waive their cash balance retirement benefit and transfer their cash balance account to the 401(k) plan effective October 1, 2018, receive a retirement benefit in the 401(k) plan only. The 401(k) plan is an automatic, non-elective contribution that is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of the eligible compensation, for a maximum matching contribution of six percent of eligible compensation. None of the NEOs are in this group.

•Employees who were first hired on or after July 1, 2014 (or who were rehired and were either previously not vested in the pension plan or cashed out their pension benefit) receive a retirement benefit in the 401(k) plan only. The 401(k) plan automatic, non-elective contribution is equal to 4.5 percent of eligible compensation, and the matching contribution is $0.75 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation. Mr. Lyash, Mr. Rausch, Mr. Fountain, and ~~Ms. Quirk~~Mr. Moul are in this group.

Cash Balance Pension. For NEOs who are eligible for retirement benefits under the pension plan, which includes ~~Mr. Johnson,~~ Mr. Thomas and Mr. Skaggs, eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the column titled "Salary" in the Summary Compensation Table. The eligible compensation in ~~2019~~2021 could not exceed ~~$275,000~~$285,000 pursuant to the IRS annual compensation limit applicable to qualified plans. Employees with cash balance benefits who have at least five years of cash balance service are eligible at retirement or termination of employment to receive

an immediate benefit in the form of a monthly pension with survivor benefit options or in a lump-sum payment with cash out or rollover options. The pension plan does not provide for early retirement benefits to any NEO or any other employee eligible for cash balance benefits.

401(k) Plan. All employees eligible to participate in the 401(k) plan, including the NEOs, may elect to contribute to the 401(k) plan on a before-tax, Roth, and/or after-tax basis. For purposes of matching and non-elective contributions from TVA to the 401(k) accounts of the NEOs, eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the column titled "Salary" in the Summary Compensation Table. The eligible compensation in ~~2019~~2021 could not exceed ~~$275,000~~$285,000 pursuant to the IRS annual compensation limit applicable to qualified plans. Any participant in the 401(k) plan must have three years of TVA service to be vested in matching and non-elective contributions from TVA.

~~Supplemental Executive Retirement Plan~~CEO Pay Ratio Disclosure

~~All NEOs are participants~~•The total compensation for the CEO position for 2021 was $9,882,680.

•For 2021, the median employee's annual total compensation was $139,953.

Based on this information, the pay ratio of the total compensation for the CEO position to the median employee was approximately 71 to 1.

To identify the median employee and to determine the annual total compensation of the median employee, TVA took the following steps:

•TVA selected September 30, 2021, as the date on which to identify its median employee. On September 30, 2021, TVA's employee population (including full-time, part-time, and temporary employees) consisted of 10,129 individuals located in the ~~SERP. The SERP~~U.S.

•In order to identify the median employee from its employee population, TVA compared the compensation that would be included in Box 5 (Medicare Wages and Tips) of Form W-2, which includes salary, overtime, and incentive compensation, for the period from October 1, 2020 to September 30, 2021. Box 5 compensation was used as it is ~~a non-qualified defined benefit pension plan similar to those typically found in other companies in TVA's peer group~~representative of the compensation received by all employees and is ~~provided to a limited number of executives, including the NEOs. TVA's SERP~~readily available and objective.

•After identifying its median employee, TVA calculated that employee's compensation for 2021 as though that compensation was created to recruit and retain key executives. The plan is designed to provide a competitive level of retirement benefits in excess of the limitations on contributions and benefits imposed by TVA's qualified defined benefit plan and Internal Revenue Code Section 415 limits on qualified retirement plans.

The SERP provides two distinct levels of participation, Tier 1 and Tier 2. Each participant is assigned to one of the two tiers at the time he or she is approved to participate in the SERP. The level of participation ("Tier") defines the level of retirement benefits under the SERP at the time of retirement.

~~Under the SERP, normal retirement eligibility is age 62 with five years of vesting service. No vested and accrued benefits are payable prior to age 55, and benefits are reduced~~being calculated for retirements prior to age 62. The level of reduction in benefits for retirements prior to age 62 depends on whether a participant's termination is "approved" or "unapproved." In the event of an approved termination of TVA employment, any vested and accrued benefits are reduced by 5/12 percent for each month that the date of benefit commencement precedes the participant's 62nd birthday, up to a maximum reduction of 35 percent. In the event of an unapproved termination of TVA employment, the participant's accrued benefits are first subject to a reduced percentage of vesting if the participant's years of service are between five and 10. At five years of vesting service, the vested percentage of retirement benefits is 50 percent and increases thereafter by 10 percent for each full additional year of service, reaching 100 percent vesting for 10 or more years of vesting service. Thereafter, any vested and accrued benefits are reduced by 10/12 percent for each month that the date of benefit commencement precedes the participant's 62nd birthday up to a maximum reduction of 70 percent.

~~For~~ purposes of the ~~SERP,~~Summary Compensation Table, resulting in annual total compensation of $139,953.

The above pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Because Item 402(u) provides companies with flexibility to select the methodology and assumptions used to identify the median employee and to calculate the pay ratio, the pay ratio reported by TVA may not be comparable to the pay ratios reported by other companies.

2021 CEO Pay Ratio Below Median Among Peers

As reflected above, TVA's CEO target TDC is low compared to its 2021 compensation peer group on an ~~"approved" termination means termination~~absolute basis but is also low compared to its peers in the context of ~~employment with TVA due to (i) retirement on or after~~organizational pay ratios. As discussed fully under "CEO Pay Ratio Disclosure", the ~~participant's 62nd birthday, (ii) retirement on or after attainment of actual age 55, if such retirement has the approval~~pay ratio of the total compensation for Mr. Lyash to the median TVA ~~Board or~~employee was approximately 71 to 1 for 2021. Based on TVA's 2021 pay ratio and the pay ratio disclosed in its ~~delegate, (iii) death in service as an employee, (iv) disability (as defined~~peers' most recent public disclosures, TVA's pay ratio is below the 50th percentile. Peers used are those shown under ~~the Rules and Regulations~~Proxy Peer Group of the TVARS) as determined by the Retirement Committee, or (v) any other circumstance approved by the TVA Board or its delegate. For purposes of the SERP, an "unapproved" termination means a termination of employment with TVA when such termination does not constitute an "approved" termination as definedInvestor-Owned Utilities in the ~~preceding sentence.~~List of Compensation Peer Companies.

2021 CEO PAY RATIO VS. PEERS

~~SERP Tier 1~~.

2021 NEO Pay Decisions and Compensation Scorecards

The ~~Tier 1 structure is designed to replace 60 percent~~following pages show each NEO's 2021 Total Direct Compensation earned, 2021 TDC opportunities granted, and the Committee's (or the CEO's in the case of NEOs other than the ~~amount~~CEO) rationale for those pay decisions.

208

Table of ~~a participant's compensation at the time the participant reaches age 62~~Contents



JEFFREY J. LYASH President and CEO Joined TVA April 2019									2021 TOTAL DIRECT COMPENSATION EARNED $7,454,730 Base Salary. Mr. Lyash's salary was increased 3.97 percent to $1,100,000 for 2021, reflecting superior performance and positioning to a more competitive base salary. This amount is below the 2021 compensation peer group median. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The TVA Board approved an Individual Performance Multiplier of 125 percent for Mr. Lyash for 2021 given his superior performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Earned. Mr. Lyash earned $754,300 in 2021 upon the vesting of the 2021 tranches of his 2020 and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Lyash was granted a 2021–2023 LTP program award with a target opportunity of $2,914,100, which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Lyash was granted a 2021 LTR program award of $1,248,900 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Lyash was paid $292,000 in 2021 as the third tranche of a deferred cash recruitment and relocation incentive under his employment offer letter. This incentive was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of substitute compensation in light of his not being eligible to earn any long-term performance incentive payments until September 2021.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •TVA has maintained its high level of service and employees continued to deliver outstanding performance in all strategic areas of the company through the COVID-19 pandemic. •Outstanding system performance experienced during the record winter storm and summer heat wave. •Effective planning and response to COVID-19 through Pandemic Response Team and union partnerships focused on enhanced safety, well-being, and communications to support the workforce. •Established an enterprise IwD to advise, champion, and oversee IwD strategies across TVA and the communities it serves. Increased diversity in leadership positions. •Developed TVA's Strategic Intent document to support internal alignment related to TVA's efforts around decarbonization and advanced innovation in energy supply. •Achieved 63% reduction in mass carbon emissions from 2005 baseline and working to obtain greater amounts of power supply from clean resources for further reductions. •Successfully facilitated the FY22 Budget Power Supply Plan. •Financial performance was strong, with debt reduced to the lowest level in 30 years, effective wholesale rates lowest in a decade, and lower interest expense in 2021 compared to 2020 mainly due to lower debt levels. •Strengthened customer relationships: 95% (145) of 153 LPCs have signed with TVA under 20-year Partnership Agreement. •The aggregate impact of these achievements was that TVA not only held rates stable and low, but returned $189 million in bill credits to LPCs participating in the long-term Partnership Agreement during 2021. •These achievements also enabled TVA to deliver a wide range of pandemic support programs to LPCs, businesses, and communities that lessened their burden and helped businesses across the Tennessee Valley recover. •Mr. Lyash's highest rated competencies were vision, innovation, and strategic direction, effective communication, and accountability and driving for results.

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JOHN M. THOMAS, III Executive Vice President and Chief Financial and Strategy Officer Joined TVA November 2005									2021 TOTAL DIRECT COMPENSATION EARNED $3,133,714 Base Salary. Mr. Thomas' salary was increased three percent to $686,582 at the beginning of 2021, reflecting strong performance and positioning to maintain a competitive base salary. Mr. Thomas’ salary was also increased 11.4 percent to $765,000 in June 2021 reflecting additional scope and responsibilities with his job title change to Executive Vice President and Chief Financial and Strategy Officer. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 105 percent for Mr. Thomas for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Awards Earned. Mr. Thomas earned $413,667 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Thomas was granted a 2021–2023 LTP program award with a target opportunity of $1,000,000. Effective June 7, 2021, Mr. Thomas was awarded a prorated 2021-2023 LTP grant of $1,039,000, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $1,000,000 made on October 1, 2020. The actual payout of the award will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Thomas was granted a 2021 LTR program award of $432,000. Effective June 7, 2021, Mr. Thomas was awarded a prorated 2021 LTR award of $441,000 which replaced the 2021 LTR program award of $432,000 made on October 1, 2020, that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Executed CFO, strategic planning, and business planning functions at an exceptionally high level, delivering results that exceeded enterprise goals in O&M expense, debt reduction, net income, and cash flow. •After assuming leadership for the Technology and Innovation units in 2020, quickly developed a comprehensive technology strategy including initiatives focused on transportation electrification, regional grid transformation, and expansion of TVA's solar power program, producing excellent 2021 results. For example, the industry-leading Green Invest Program resulted in more than 2,000 MWs of solar development across the Valley. •Continued to effectively manage revenue loss risk presented by the COVID-19 pandemic by working across the organization to manage O&M expense, adjust capital spending, and develop and extend a range of LPC and community support programs. These programs included direct fund matching to communities through the Community Care Fund and support through the Back-to-Business Credit program. •Effectively managed TVA liquidity, access to debt markets, and liability management activities to maintain TVA's strong financial position and lower interest expense. •Continued to successfully build TVA's ESG programs and communicate them effectively to stakeholders, including the financial community, executing TVA's first Investor ESG day. •Executed major bond issuance, including TVA's first ever Green Bonds that garnered the lowest 10-year rate in TVA history. •Continued to reduce TVA debt, achieving the lowest level in 30 years. •Total number of Long-Term Partnership Agreements increased in 2021, which returned $189 million to participating LPCs in 2021. •A key leader in delivering organizational financial performance that was the foundation for providing TVA customers with a 2.5% Pandemic Relief Credit on their monthly bills in 2021, and creating a Pandemic Recovery Credit of 2.5% for application throughout 2022. •Continued to mature the TVA Enterprise Risk Management Program, delivering superior risk insights contributing to material risk reduction. •In partnership with a range of internal organizations, developed and brought to the TVA Board a Carbon-informed Asset plan and a Strategic Intent and Guiding Principles Document that lay the foundation of TVA's greenhouse gas reduction glide path while maintaining low cost and high reliability.

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TIMOTHY S. RAUSCH Executive Vice President and Chief Nuclear Officer Joined TVA October 2018									2021 TOTAL DIRECT COMPENSATION EARNED $1,938,804 Base Salary. Mr. Rausch's salary was increased three percent to $551,668 for 2021, reflecting solid performance and positioning to maintain a competitive base salary. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 105 percent for Mr. Rausch for 2021 given his solid performance and notable achievements, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Payments Earned. Mr. Rausch earned $277,750 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program award. The LTR program award vests ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Rausch was granted a 2021–2023 LTP program award with a target opportunity of $500,000, which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Rausch was granted a 2021 LTR program award of $330,000 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Effectively led strong TVA nuclear fleet progress towards best-in-class operation, substantially improving nuclear fleet performance metrics and making solid progress toward the enterprise objective that all nuclear units achieve top quartile performance in 2022. •Completed 2021 with zero recordable injuries to TVA nuclear employees, effective with October 8, 2021 recorded data. •Substantially strengthened nuclear safety culture and safety conscious work environment, including improvement of Employee Concerns Program effectiveness, leadership timeliness in addressing employee issues and workforce communication that were recognized by the NRC with the closure of work environment related open concerns. •Completed the Extended Power Uprate program at Browns Ferry Nuclear Plant that increased cost effective power output by 11 percent and received nuclear industry recognition for project excellence. •Completed a broad portfolio of investments that significantly improved nuclear fleet safety and reliability. •Demonstrated nuclear value by delivering high reliability of the nuclear fleet through extreme winter weather and during the high load summer season. •Completed a series of major nuclear plant refueling outages involving thousands of workers, largely on budget and on schedule despite challenges presented by the COVID-19 pandemic. •Led a team that continued to advance the company's new nuclear program focused on deployment of light water Small Modular Reactors, which is a critical milestone in the development of this zero carbon generating resource. In addition, formed a partnership focused on development of next generation reactors including construction of a molten fluoride salt test reactor at Oak Ridge. •Championed the enterprise IwD Initiative, increasing diversity in the nuclear organization and mentoring the enterprise IwD Leadership Council.

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DAVID B. FOUNTAIN Executive Vice President and General Counsel (effective March 2021; former Senior Vice President, Vice General Counsel) Joined TVA June 2020									2021 TOTAL DIRECT COMPENSATION EARNED $1,074,607 Base Salary. Mr. Fountain’s salary was increased 3.5 percent to $465,750 at the beginning of 2021 reflecting his superior performance and positioning to maintain a competitive base salary. Mr. Fountain’s salary was also increased 15.9 percent to $540,000 in March 2021, with his selection as Executive Vice President and General Counsel. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 100 percent for Mr. Fountain for 2021 given his solid performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Award Payments Earned. Mr. Fountain did not participate in the 2019-2021 LTP program, and thus did not receive any LTP payout in 2021. Long-Term Retention Award Payments Earned. Mr. Fountain earned $105,500 in 2021 as the first tranche of his 2021 LTR program. The 2021 LTR award vests ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Fountain was granted a 2021-2023 LTP program award with a target opportunity of $375,000. Effective March 5, 2021, Mr. Fountain was awarded a prorated 2021-2023 LTP grant of $562,500, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $375,000. The actual payout of the award will depend on performance against targets at the end of a three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Fountain was granted a 2021 LTR program award of $249,000. Effective with the March 5, 2021 selection, Mr. Fountain was awarded a prorated 2021 LTR award of $316,500 which replaced the 2021 LTR program award of $249,000 made on October 1, 2020, and vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Fountain was paid $100,000 in 2021 as the second installment of a deferred cash relocation incentive under his employment offer letter and $350,000 as the second installment of a deferred cash recruitment incentive under his employment offer letter.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Effectively led the activities of the Office of the General Counsel ("OGC) across multiple areas of law, including nuclear, regulatory, commercial, environmental, litigation, employment, natural resources, and others. •Served a critical role as an insightful, strategic, and trusted advisor to the Enterprise Leadership Team and to the TVA Board. •Counseled the enterprise through a variety of novel legal challenges including challenges to the public power model established by the TVA Act and a favorable decision in the Nuclear Development lawsuit related to the disposition of the Bellefonte Nuclear Plant site. •As Corporate Secretary supported the TVA Board in developing and implementing changes intended to strengthen the company's governance and improve transparency, including restructuring Board Committees. •As Vice General Counsel, led TVA's response to Executive Orders and interactions with other federal offices that successfully resolved significant issues and built confidence and trust. •Continued to successfully support the organization in developing the basis and structure of the portfolio of COVID-19 pandemic-related programs delivered across the TVA service area. •Took significant steps to strengthen the TVA Ethics Program, including completion of a comprehensive program assessment and development of a long-term improvement plan •Successfully completed the transition of the OGC organization from the prior General Counsel, building employee confidence and engagement. •Expanded the OGC's pro-bono legal support initiative that is positively impacting lives in support of TVA's mission of service.

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DONALD A. MOUL Executive Vice President and Chief Operating Officer Joined TVA June 2021									2021 TOTAL DIRECT COMPENSATION EARNED $854,831 Base Salary. Mr. Moul’s salary was approved as $765,000 commensurate with his employment on June 21, 2021 as Executive Vice President and Chief Operating Officer. Salary earned in 2021 was $205,962. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 115 percent for Mr. Moul for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Award Payments Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Payments Earned. Mr. Moul earned $327,084 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020 and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective with his hire, Mr. Moul was granted a prorated 2021-2023 LTP program award with a target opportunity of $588,750 which will vest on September 30, 2023. The actual payout of the award will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective with his hire, Mr. Moul was granted a prorated 2021-2023 LTR program award of $588,750 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Moul was paid $650,000 in 2021 as the first installment of a deferred cash recruitment and relocation incentive under his employment offer letter.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Completed a highly successful 100-day Chief Operating Officer transition plan that maintained operational quality, built employee confidence, and effectively completed the turnover of the Chief Operating Officer position with Mr. Skaggs coincident with the end of the fiscal year. •Effectively engaged with the staff and coordinated system and river operations activities through a significant rainfall year and the highest load period in nearly a decade without customer interruption or price instability. •Quickly acclimated to the TVA organization, culture, and operation and established himself as an effective senior executive. •Completed an extensive program of customer and stakeholder outreach to establish the constructive relationships needed to effectively lead the enterprise, receiving strong positive stakeholder feedback on this critical executive turnover. •Effectively led organizational response to a series of COVID-related Executive Orders in a manner that satisfied these directives without disrupting performance. •Led the organizational response to a tragic contract employee fatality, supporting the responsible contract partner company in their investigation and ensuring that TVA learned all appropriate lessons and took timely improvement actions.

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MICHAEL D. SKAGGS Executive Vice President and Advisor to the Chief Operating Officer (effective June 2021; former Executive Vice President and Chief Operating Officer) Joined TVA February 1994									2021 TOTAL DIRECT COMPENSATION EARNED $3,335,868 Base Salary. Mr. Skaggs's salary was increased four percent to $689,936 for 2021, reflecting strong performance and positioning to maintain a competitive base salary. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVABoard approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 115 percent for Mr. Skaggs for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019-2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Awards Earned. Mr. Skaggs earned $451,000 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program awards, respectively. The LTR program awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Skaggs was granted a 2021–2023 LTP program award with a target opportunity of $1,175,000 which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Skaggs was granted a 2021 LTR program award of $504,000 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Led the operational teams to the best industrial safety performance in TVA history for the second consecutive year, with top quartile Serious Injury Rate and top decile OSHA Injury Rate. •Provided exceptional reliability during two extreme cold and heat-related weather events, delivering high generating station performance, strong transmission system performance, and outstanding system management. •In partnership with a range of internal organizations, developed and brought to the TVA Board a Carbon-informed Asset plan and a Strategic Intent and Guiding Principles Document that lay the foundation of TVA's greenhouse gas reduction glide path while maintaining low cost and high reliability. •Continuously improved transmission reliability in 2021, again setting industry performance standards, and resulting in more reliable and higher-quality power delivery to industrial customers, LPCs, and communities. •Led significant improvement of non- nuclear generation fleet performance in 2021, exceeding aggressive goals and contributing to lower fuel costs and considerable savings to customers. •Progressed the Grid of Tomorrow program, which is focused on building the integrated energy system of the future, on schedule and on budget. •Continued to build TVA's ESG program and issued TVA's second Sustainability Report, clearly communicating TVA's leadership position in this important dimension of corporate stewardship. •Led improvement efforts for critical support functions of supply chain, environmental programs, and security. •Evaluated, assisted in lessons learned incorporation, and provided meaningful mentorship for the Watts Bar Unit 2 Nuclear Plant Steam Generator Project. •Advised the TVA nuclear team in developing the Small Modular Reactor program, a key to achieving future carbon reduction goals.

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Executive Compensation Tables and ~~has accrued 24 years~~Narrative Disclosures

Summary Compensation and Grants of TVA service. Tier 1 benefits are based on a participant's highest average compensation during three consecutive SERP years and a pension multiple of 2.5 percent for each year of credited service up to a maximum of 24 years. Compensation is defined as salary and EAIP for benefit calculation purposes. Tier 1 benefits are offset by Social Security benefits, benefits provided under TVA's qualified defined benefit pension plan, and prior employer pension benefits when applicable.Plan-Based Awards

~~SERP Tier 2~~. The purpose of this restoration plan is to adjust qualified plan benefits to executives when benefits are lost due to IRS limits. Pension benefits are based on a participant's average compensation over three consecutive fiscal years and a pension multiplier of 1.3 percent for each year of service. For benefit calculation, pension includes salary and annual incentives.

~~Nonqualified Deferred Compensation~~

The following table provides information ~~regarding~~on compensation earned by each of the NEOs in 2021 (and 2020 and 2019, as applicable).

SUMMARY COMPENSATION TABLE


Name and Principal Position	Year	Salary		Bonus(1)		Non-Equity Incentive Plan Compensation(2)			Change in Pension Value and Nonqualified Deferred Compensation Earnings(3)			All Other Compensation(4)		Total
Jeffrey J. Lyash	2021	$	1,100,000	$	—	$	6,354,730		$	2,110,300		$	317,650	$	9,882,680
President and Chief	2020	1,058,000		—		2,729,609		(5)	2,271,647		(6)	1,237,977		7,297,233
Executive Officer	2019	445,846		380,000		861,969		(7)	5,970,873		(8)	504,835		8,163,523
John M. Thomas, III	2021	$	710,711	$	—	$	2,423,003		$	767,504		$	21,375	$	3,922,593
Executive Vice President and	2020	666,584		—		2,210,410		(9)	980,220		(10)	21,000		3,878,214
Chief Financial and Strategy Officer	2019	648,208		52,500		1,804,797		(11)	1,076,752		(12)	20,625		3,602,882
Timothy Rausch	2021	$	551,668	$	—	$	1,387,136		$	237,895		$	25,650	$	2,202,349
Senior Vice President	2020	535,600		—		1,031,390		(13)	106,428		(14)	159,794		1,833,212
and Chief Nuclear Officer	2019	502,000		—		713,750		(15)	72,784		(16)	255,735		1,544,269
David Fountain	2021	$	507,444	$	—	$	567,163		$	4,167		$	479,295	$	1,558,069
Executive Vice President	2020	—		—		—			—			—		—
and General Counsel	2019	—		—		—			—			—		—
Donald Moul	2021	$	205,962	$	—	$	648,869		$	—		$	678,098	$	1,532,929
Executive Vice President	2020	—		—		—			—			—		—
and Chief Operating Officer	2019	—		—		—			—			—		—
Mike D. Skaggs	2021	$	689,936	$	—	$	2,645,932		$	1,223,557		$	12,825	$	4,572,250
Executive Vice President	2020	663,400		—		2,150,295		(17)	1,609,999		(18)	12,600		4,436,294
and Advisor to the CEO	2019	614,692		52,500		1,716,194		(19)	2,017,130		(20)	12,375		4,412,891

Notes

(1) There were no bonus awards in 2021.

(2) The 2021 data is outlined in the table below.

NON-EQUITY INCENTIVE PLAN COMPENSATION


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain		Donald Moul		Michael D. Skaggs
EAIP	$	2,928,750	$	847,736	$	575,776	$	461,663	$	235,435	$	901,332
LTP	2,671,680		1,161,600		533,610		—		86,350		1,293,600
LTR 2019-03(A)	—		126,667		57,750		—		21,806		140,000
LTR 2020-02(B)	338,000		140,000		110,000		—		109,028		143,000
LTR 2021-01(C)	416,300		147,000		110,000		105,500		196,250		168,000

Total	$	6,354,730	$	2,423,003	$	1,387,136	$	567,163	$	648,869	$	2,645,932

Notes

(A) LTR grant representing the third tranche of the LTR award effective October 1, 2018.

(B) LTR grant representing the second tranche of the LTR award effective October 1, 2019.

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(3) The 2021 data is outlined in the table below.

CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain		Donald Moul		Michael D. Skaggs
Increase under TVARS Plans	$	—	$	17,652	$	—	$	—	$	—	$	41,797
Increase under SERP	2,110,300		749,852		237,895		4,167		—		1,181,760
Total	$	2,110,300	$	767,504	$	237,895	$	4,167	$	—	$	1,223,557

(4) The 2021 data is outlined in the table below.

ALL OTHER COMPENSATION


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain			Donald Moul			Michael D. Skaggs
401(k) Matching Contribution	$	12,825	$	12,825	$	12,825	$	12,825		$	7,944		$	12,825
Non-Elective 401(k) Contribution	12,825		8,550		12,825		12,825			9,268			—
Deferred Cash Recruitment/Relocation Incentive	292,000		—		—		450,000		(A)	650,000		(B)	—
Relocation Benefits	—		—		—		3,645			10,886			—
Total	$	317,650	$	21,375	$	25,650	$	479,295		$	678,098		$	12,825

Notes

(A) Under the terms of his offer letter, Mr. Fountain is required to repay to TVA deferred ~~contributions, earnings,~~cash relocation incentive payments in the amount of $150,000 if, prior to June 1, 2022, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and ~~balances~~acceptable to TVA, or (2) he is terminated for cause. In addition, Mr. Fountain is required to repay to TVA deferred cash relocation incentive payments in the amount of $100,000 if, prior to June 1, 2023, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) he is terminated for cause.

(5) Represents $2,391,609 awarded under the EAIP and $338,000 awarded under the LTR.

(6) Reflects increase of $2,271,647 under the SERP.

(7) Represents $861,969 awarded under the EAIP.

(8) Reflects increase of $5,970,873 under the SERP.

(9) Represents $730,576 awarded under the EAIP, $1,096,500 awarded under the LTP, and $383,334 awarded under the LTR.

(10) Reflects increases of $34,401 under the Cash Balance Pension and $945,819 under the SERP.

(11) Represents $660,630 awarded under the EAIP, $817,500 awarded under the LTP, and $326,667 awarded under the LTR.

(12) Reflects increases of $60,304 under the Cash Balance Pension and $1,016,448 under the SERP.

(13) Represents $513,640 awarded under the EAIP, $167,750 awarded under the LTR, and $350,000 awarded under a Performance Incentive Arrangement.

(14) Reflects increase of $106,428 under the SERP.

(15) Represents $406,000 awarded under the EAIP, $57,750 awarded under the LTR, and $250,000 awarded under a Performance Incentive Arrangement.

(16) Reflects increase of $72,784 under the SERP.

(17) Represents $799,795 awarded under the EAIP, $967,500 awarded under the LTP, and $383,000 awarded under the LTR.

(18) Reflects increases of $55,129 under the Cash Balance Pension and $1,554,870 under the SERP.

(19) Represents $575,360 awarded under the EAIP, $817,500 awarded under the LTP, and $323,334 awarded under the LTR.

(20) Reflects increases of $91,600 under the Cash Balance Pension and $1,925,530 under the SERP.

The following table provides information on non-equity incentive plan opportunities and grants provided to NEOs and the possible range of payouts associated with the opportunities and grants. Awards under the EAIP, LTP, and LTR that vested as of September 30, 2021, will be paid in cash during the first quarter of 2022.

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GRANTS OF PLAN-BASED AWARDS TABLE

as of September 30, 2021


			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)							Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
			Current Year							Future Years
Name	Plan		Threshold(2)		Target(2)		Maximum(2)			Threshold(2)		Target(2)		Maximum(2)			Performance Period Ending/Vesting Date
Jeffrey J. Lyash	EAIP	(3)	$	825,000	$	1,650,000	$	2,475,000									9/30/2021
	LTP 2019	(4)	1,012,000		2,024,000		3,036,000										9/30/2021
	LTR 2020-02	(5)			338,000		338,000										9/30/2021
	LTR 2021-01	(5)			416,300		416,300										9/30/2021
	LTP 2020	(6)								$	1,170,500	$	2,341,000	$	3,511,500		9/30/2022
	LTR 2020-03	(5)										338,000		338,000			9/30/2022
	LTR 2021-02	(5)										416,300		416,300			9/30/2022
	LTP 2021	(7)								1,457,050		2,914,100		4,371,150			9/30/2023
	LTR 2021-03	(5)										416,300		416,300			9/30/2023

John M. Thomas, III	EAIP	(3)	$	284,284	$	568,568	$	852,852									9/30/2021
	LTP 2019	(4)	440,000		880,000		1,320,000										9/30/2021
	LTR 2019-03	(5)			126,667		126,667										9/30/2021
	LTR 2020-02	(5)			140,000		140,000										9/30/2021
	LTR 2021-01	(5)			147,000		147,000										9/30/2021
	LTP 2020	(6)								$	490,000	$	980,000	$	1,470,000		9/30/2022
	LTR 2020-03	(5)										140,000		140,000			9/30/2022
	LTR 2021-02	(5)										147,000		147,000			9/30/2022
	LTP 2021	(7)								519,500		1,039,000		1,558,500			9/30/2023
	LTR 2021-03	(5)										147,000		147,000			9/30/2023


Timothy Rausch	EAIP	(3)	$	193,084	$	386,168	$	579,252									9/30/2021
	LTP 2019	(4)	202,125		404,250		606,375										9/30/2021
	LTR 2019-03	(5)			57,750		57,750										9/30/2021
	LTR 2020-02	(5)			110,000		110,000										9/30/2021
	LTR 2021-01	(5)			110,000		110,000										9/30/2021
	LTP 2020	(6)								$	250,000	$	500,000	$	750,000		9/30/2022
	LTR 2020-03	(5)										110,000		110,000			9/30/2022
	LTR 2021-02	(5)										110,000		110,000			9/30/2022
	LTP 2021	(7)								250,000		500,000		750,000			9/30/2023
	LTR 2021-03	(5)										110,000		110,000			9/30/2023


David Fountain	EAIP	(3)	$	162,557	$	325,114	$	487,672									9/30/2021
	LTR 2021-01	(5)			105,500		105,500										9/30/2021
	LTP 2020	(6)								$	187,500	$	375,000	$	562,500		9/30/2022
	LTR 2021-02	(5)										105,500		105,500			9/30/2022
	LTP 2021	(7)								281,250		562,500		843,750			9/30/2023
	LTR 2021-03	(5)										105,500		105,500			9/30/2023






Donald Moul	EAIP	(3)	$	72,087	$	144,173	$	216,260									9/30/2021
	LTP 2019	(4)	32,709		65,417		98,126		(8)								9/30/2021
	LTR 2019-03	(5)			21,806		21,806		(9)								9/30/2021
	LTR 2020-02	(5)			109,028		109,028		(10)								9/30/2021
	LTR 2021-01	(5)			196,250		196,250		(11)								9/30/2021
	LTP 2020	(6)								$	163,542	$	327,083	$	490,625	(12)	9/30/2022
	LTR 2020-03	(5)										109,028		109,028		(10)	9/30/2022
	LTR 2021-02	(5)										196,250		196,250		(11)	9/30/2022
	LTP 2021	(7)								294,375		588,750		883,125		(13)	9/30/2023
	LTR 2021-03	(5)										196,250		196,250		(11)	9/30/2023

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Michael D. Skaggs	EAIP	(3)	$	275,975	$	551,949	$	827,924							9/30/2021
	LTP 2019	(4)	490,000		980,000		1,470,000								9/30/2021
	LTR 2019-03	(5)			140,000		140,000								9/30/2021
	LTR 2020-02	(5)			143,000		143,000								9/30/2021
	LTR 2021-01	(5)			168,000		168,000								9/30/2021
	LTP 2020	(6)							$	495,000	$	990,000	$	1,485,000	9/30/2022
	LTR 2020-03	(5)									143,000		143,000		9/30/2022
	LTR 2021-02	(5)									168,000		168,000		9/30/2022
	LTP 2021	(7)							587,500		1,175,000		1,762,500		9/30/2023
	LTR 2021-03	(5)									168,000		168,000		9/30/2023

Notes

(1) TVA does not have any equity securities and therefore has no equity-based awards.

(2) Threshold, Target, and Maximum represent amounts that could be earned by an NEO based on performance during the applicable performance cycle. Threshold, Target, and Maximum targets for EAIP and LTIP are 50 percent, 100 percent, and 150 percent.

(3) Target incentive opportunities as a percentage of salaries were as follows: Mr. Lyash, 150 percent; Mr. Thomas, 80 percent; Mr. Rausch, 70 percent; Mr. Fountain, 70 percent; Mr. Moul, 70 percent; and Mr. Skaggs, 80 percent. Additionally, a corporate multiplier ranging between 0.00 and 1.00 may be applied which can reduce the award to $0. An individual performance multiplier of up to 150 percent may also be applied which may increase the award to 225 percent of target. Actual EAIP awards earned for performance in 2021 are reported for each of the ~~NEOs. The amounts reported~~NEOs under ~~this table do not represent compensation in addition to~~ the ~~compensation that was earned in 2019 and already reported~~"Non-Equity Incentive Plan Compensation" column in the Summary Compensation ~~Table, but rather~~Table. See Compensation Discussion and Analysis for a discussion of how each award was determined. Mr. Thomas and Mr. Fountain's target incentive opportunities are prorated based on the ~~amounts~~number of ~~compensation earned by~~days worked in each position during the performance cycle. Mr. Moul did not work a full year, and his target incentive opportunity is prorated based on the numbers of days worked in the performance cycle.

(4) Mr. Lyash's LTP award was granted October 1, 2019, and vested September 30, 2021. Mr. Moul's LTP award was granted as part of his employment offer and vested September 30, 2021. All other LTP awards were granted October 1, 2018, and vested September 30, 2021. At the end of the performance period, TVA's LTIP Scorecard was applied to the grants in order to determine award payouts. Award payouts are reported for each of the NEOs ~~in 2019 or prior years that were or have been deferred.~~

Nonqualified Deferred Compensation Table

Name
Executive
Contributions in 2019
Registrant
Contributions in 2019

Aggregate
Earnings in
2019

Aggregate
Withdrawals/
Distributions

Aggregate
Balance at
September 30, 2019

Jeffrey J. Lyash $ —
$ —
$ —
$ —
$ —

William D. Johnson —
—
—
—
—

John M. Thomas, III —
—
—
—
—

Michael D. Skaggs —
—
213,467
⁽¹⁾
—
4,988,460
⁽²⁾
Sherry A. Quirk —
—
—
—
—

Timothy Rausch —
—
—
—
—

~~Notes~~

~~(1) Includes vested earnings. Because none of~~under the ~~amounts are above market or preferential earnings under SEC rules, none of these amounts are included~~"Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table. Mr. Fountain did not participate in the 2019-2021 LTP program.

~~(2) Includes vested contributions~~(5) All LTR awards will be paid in a lump sum within two months of the September 30th vesting date. The awards will be paid in cash after deducting applicable federal, state, and ~~earnings. $600,000~~local withholding taxes. In the case of ~~this amount has been~~death, the beneficiary will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant's death. Disability awards will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant's separation from service due to disability. Actual LTR awards earned in 2021 are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation ~~Table~~Table.

(6) Mr. Fountain's LTP award was granted as ~~compensation for a prior fiscal year.~~

part of his employment offer and will vest September 30, 2022. Mr. Moul's LTP award was granted as part of his employment offer and will vest September 30, 2022. All other LTP awards were granted effective October 1, 2019 and will vest September 30, 2022. At the end of the performance period, TVA's ~~compensation plans~~LTIP Scorecard will be applied to the grants in order to determine award payouts. The final award may allow participants to defer all or a portion of compensation earned under the plans as defined by plan terms and IRS regulations. All deferrals are credited to each participant in a deferred compensation account, and the deferral amounts are then funded into a rabbi trust. Each participant may elect one or more investment options made available by TVA or allow some or all funds to accrue interest at the rate establishedbe adjusted by the ~~beginning~~TVA Board based on the evaluation of ~~each fiscal year equal to~~ the ~~composite rate~~participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(7) Mr. Moul's LTP award was granted as part of ~~all Treasury issues. Participants may elect to change from either one notional investment option or the TVA interest bearing option to another at any time. Upon termination~~his employment offer and will vest September 30, 2023. All other LTP awards were originally granted October 1, 2020, and will vest September 30, 2023. Effective March 5, 2021, Mr. Fountain was awarded a prorated 2021-2023 LTP grant of ~~employment, funds are distributed pursuant to elections made in accordance with applicable IRS regulations.~~

~~Participants in the EAIP and LTIP, including the NEOs, were not allowed to elect to defer any portion of their awards received under the plans for 2019.~~

~~Potential Payments on Account of Retirement/Resignation, Termination without Cause, Termination with Cause, Death, or Disability~~

~~The tables below show certain potential payments that would have been made to each NEO if his or her employment had been terminated~~$562,500, which will vest on September 30, ~~2019, under various scenarios. All~~2023, and replaced the 2021-2023 LTP grant of $375,000 made on October 1, 2020. In addition, effective June 7, 2021, Mr. Thomas was awarded a prorated 2021-2023 LTP grant of $1,039,000, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $1,000,000 made on October 1, 2020. At the end of the ~~Named Executive Officers would also~~performance period, TVA's LTIP Scorecard will be ~~entitled~~applied to ~~payments from plans generally available~~the grants in order to determine award payouts. The final award may be adjusted by the TVA ~~employees under~~Board based on the ~~specific circumstances~~evaluation of ~~termination~~the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(8) Reflects prorated amount of ~~employment,~~3/36th of the target grant amount of $785,000 for the 2019-2021 LTP performance cycle.

(9) Reflects prorated amount of 3/36th of the LTR grant of $785,000 for the 2019-2021 retention cycle.

(10) Reflects prorated amount of 15/36th of the LTR grant of $785,000 for the 2020-2022 retention cycle.

(11) Reflects prorated amount of 27/36th of the LTR grant of $785,000 for the 2021-2023 retention cycle.

(12) Reflects prorated amount of 15/36th of the target grant amount of $785,000 for the 2020-2022 LTP performance cycle.

(13) Reflects prorated amount of 27/36th of the target grant amount of $785,000 for the 2021-2023 LTP performance cycle.

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Table of Contents

Retirement and Pension Plans

The table below provides the actuarial present value of the NEOs' accumulated benefits, including the ~~health and welfare~~number of years of credited service, under TVA's retirement and pension plans as of September 30, 2021, determined using a methodology and ~~amounts~~interest rate and mortality rate assumptions consistent with those used in the ~~401(k) plan.~~financial statements in this Annual Report, set forth in Note 22 —Benefit Plans.

Jeffrey J. Lyash Retirement/Resignation Termination without Cause Termination with Cause

Death

Disability
Severance Agreement⁽¹⁾
$ —
$ 2,300,000
$ —
$ —
$ —

SERP⁽²⁾
2,793,923
3,049,044
2,793,923
3,049,044
⁽³⁾
3,049,044

EAIP 861,969
861,969
861,969
861,969
861,969

Recruitment/Relocation Incentive⁽⁴⁾
400,000
400,000
400,000
400,000
400,000

LTP —
—
—
281,111
⁽⁵⁾
281,111
⁽⁶⁾
Deferred Compensation —
—
—
—
—

Total Value of Potential Payments $ 4,055,892
$ 6,611,013
$ 4,055,892
$ 4,592,124
$ 4,592,124

PENSION BENEFITS TABLE


Name	Plan Name	Number of Years of Credited Service(1)		Present Value of Accumulated Benefit			Payments During Last Year
Jeffrey J. Lyash	TVARS	N/A		N/A		(3)	$	—
	SERP Tier 1	12.417	(2)	$	10,352,820		—
John M. Thomas, III	TVARS	15.833		429,601			—
	SERP Tier 1	15.833		5,384,711			—
Timothy Rausch	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	2.917		417,107			—
David Fountain	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	1.333		4,167			—
Donald Moul	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	0.250		—			—
Michael D. Skaggs	TVARS	27.583		814,475			—
	SERP Tier 1	24.000	(4)	9,075,757			—

Notes

(1) ~~In February 2019, TVA entered into an arrangement with~~ Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below.

(2) Mr. Lyash that provides a lump-sum payment equal to one year’s annual salary and one year’s executive annual incentive based on 100 percent target payout in the event TVA terminates his employment without cause. For purposes of this provision, termination without cause includes constructive termination which will be deemed to occur if Mr. Lyash terminates his employment because he is asked to take a new position with TVA with a material reduction in level of authority, duties, compensation, and benefits. This provision will not apply, and no lump-sum payment will be made, in the event Mr. Lyash voluntarily terminates his employment or voluntarily retires, or his employment is terminated “for cause” as defined in the agreement.

~~(2) In February 2019, TVA entered into an arrangement with Mr. Lyash that provides that at the commencement of his employment with TVA, he will be~~was granted five years of credited service for calculating his SERP benefit. In the event of involuntary termination except for cause prior to five years of actual service, the vesting requirement will be waived, and he will be entitled to the additional five years of granted credited service plus his actual years of service for calculating his SERP benefit. In the event of termination for cause or voluntary termination for any reason prior to five years of actual service, the vesting requirement will be waived and his SERP benefit will be calculated based on a total of five years of credited service.

~~(3) In the event~~ After five years of ~~death while employed by~~actual service with TVA, ~~the beneficiary~~he will ~~receive~~be granted five additional years of credited service for a ~~lump sum payment equal to the actuarial equivalent~~total of ~~the benefit that would have been paid had the participant terminated employment on the date~~15 years of ~~death and elected a joint and 50 percent survivor~~credited service for calculating his SERP benefit. ~~Survivor will receive 50 percent~~As of ~~the reported value.~~

~~(4)~~September 30, 2021, Mr. Lyash ~~received a Recruitment/Relocation Incentive~~had 2.417 years of ~~$1,784,000 upon employment, and $400,000 of this amount vested on September 30, 2019.~~

~~(5)~~service. The LTIP provides that in the event of the death of a participant, the participant’s beneficiary is entitled to (1) any LTP award that had vested at the time of the participant’s death but not been paid and (2) any LTP awards that had not vested at the time of the participant’s death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(6) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant’s separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant’s separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

John M. Thomas, III

Retirement/Resignation Termination without Cause Termination with Cause Death Disability
Severance Agreement⁽¹⁾
$ —
$ —
$ —
$ —
$ —

SERP 3,689,040
^(2)
(3)
(4)
3,689,040
⁽²⁾
⁽³⁾
⁽⁴⁾
3,689,040
⁽²⁾
⁽³⁾
⁽⁴⁾
3,689,040
⁽²⁾
⁽⁵⁾
3,689,040
⁽²⁾⁽³⁾
EAIP 660,630
660,630
660,630
660,630
660,630

LTR 326,667
326,667
326,667
490,556
⁽⁶⁾
490,556
⁽⁷⁾
LTP 870,000
⁽⁸⁾
870,000
870,000
1,730,000
⁽⁹⁾
1,730,000
⁽¹⁰⁾
Deferred Compensation —
—
—
—
—

Total Value of Potential Payments $ 5,546,337
$ 5,546,337
$ 5,546,337
$ 6,570,226
$ 6,570,226

~~Notes~~

~~(1) Mr. Thomas does not have a severance agreement with TVA.~~

~~(2) Represents the~~ present value of the accumulated ~~benefit.~~

~~(3) Actual~~SERP benefit ~~would be paid in five annual installments beginning at age 55.~~

~~(4) Assumes that the TVA Board or its delegate determines that the termination~~with 7.417 years of credited services is ~~an approved termination under SERP. See~~ ~~Retirement and Pension Plans~~ — ~~Supplemental Executive Retirement Plan~~ ~~above for a discussion of approved and unapproved terminations under SERP.~~

(5) In the event of death while employed by TVA, the beneficiary would receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivor benefit. Survivor will receive 50 percent of the reported value.

~~(6)~~$6,156,339. The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(7) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(8) In the event of retirement, Mr. Thomas will receive $870,000 upon retirement, two-thirds of the actual LTP award that vests on September 30, 2020, and one-third of the actual LTP award that vests on September 30, 2021.

(9) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(10) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

Michael D. Skaggs Retirement/Resignation Termination without Cause Termination with Cause Death Disability
Severance Agreement⁽¹⁾
$ —
$ —
$ —
$ —
$ —

SERP 6,339,127
⁽²⁾
⁽³⁾
⁽⁴⁾
6,339,127
⁽²⁾
⁽³⁾
⁽⁴⁾
6,339,127
^(2)
(3)
(4)
6,339,127
⁽²⁾
⁽⁵⁾
6,339,127
⁽²⁾
⁽³⁾

EAIP 575,360
575,360
575,360
575,360
575,360

LTR 323,334
323,334
323,334
490,001
⁽⁶⁾
490,001
⁽⁷⁾

LTP 870,000
⁽⁸⁾
870,000
870,000
1,696,667
⁽⁹⁾
1,696,667
⁽¹⁰⁾
Deferred Compensation⁽¹¹⁾
4,988,460
4,988,460
4,988,460
4,988,460
4,988,460

Total Value of Potential Payments $ 13,096,281
$ 13,096,281
$ 13,096,281
$ 14,089,615
$ 14,089,615

~~Notes~~

~~(1) Mr. Skaggs does not have a severance agreement with TVA.~~

~~(2) Represents the~~ present value of the accumulated ~~benefit.~~SERP benefit with 12.417 years of credited service is $10,352,820.

(3) ~~Actual benefit would be paid~~ Mr. Lyash, Mr. Rausch, Mr. Fountain, and Mr. Moul are not eligible to participate in ~~ten annual installments beginning~~the TVARS Pension Plan since they were hired after June 30, 2014.

(4) Mr. Skaggs has reached the 24-year service cap allowed under the SERP.

Qualified Retirement Plans

The retirement benefits for which employees are eligible and receive under the TVARS pension plan and 401(k) plan depend on the employee's hire date, years of ~~Mr. Skaggs' separation~~service, and individual elections, as follows:

~~(4) Assumes that~~TVA. The 401(k) plan matching contribution is $0.25 on every dollar contributed by the ~~TVA Board or its delegate determines that the termination is an approved termination under SERP. See~~ ~~Retirement and Pension Plans~~ — ~~Supplemental Executive Retirement Plan~~ ~~above~~employee up to six percent of eligible compensation, for a ~~discussion~~maximum matching contribution of ~~approved and unapproved terminations under SERP.~~

~~(5) In the event~~1.5 percent of ~~death while employed by TVA, the beneficiary would receive a lump sum payment equal to the actuarial equivalent~~eligible compensation. None of the NEOs are in this group.

~~(6) The LTIP provides that~~accrue over time in the ~~event of~~employee's account and (b) the ~~death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested~~employee's age at the time of retirement, and (ii) 401(k) plan matching contributions from TVA. The monthly pay credits are equal to six percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the ~~participant's death but not been paid~~change in the CPI-U plus three percent (with a minimum of six percent and maximum of 10 percent). The interest rate during 2021 was six percent. The 401(k) plan matching contribution is $0.75 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation. Mr. Skaggs is in this group.

•Employees who were first hired on or after January 1, 1996, and who had 10 or more years of service as ~~well as~~of October 1, 2016, receive (i) a ~~prorated portion of any LTR grant~~cash balance pension benefit calculated based on (a) pay-based credits and interest that ~~had not vested~~accrue over time in the employee's account and (b) the employee's age at the time of retirement, and (ii) 401(k) plan non-elective and matching contributions from TVA. The monthly pay credits are equal to three percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the ~~participant's separation from~~change in the CPI-U plus two percent (with a minimum of 4.75 percent and a

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maximum of 6.25 percent). The interest rate during 2021 was 4.75 percent. The 401(k) plan automatic, non-elective contribution is equal to three percent of eligible compensation, and the matching contribution is $0.75 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation. Mr. Thomas is in this group.

•Employees who were first hired on or after January 1, 1996, and who had less than 10 years of service ~~provided that the LTR award for each vesting period will be prorated~~as of October 1, 2016, receive (i) a cash balance pension benefit calculated based on pay-based credits and interest that accrue over time in the ~~number of whole months~~employee's account and the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

~~(7) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested~~employee's age at the time of retirement, and (ii) 401(k) plan non-elective and matching contributions from TVA. As of October 1, 2016, the ~~separation from service but not been paid as well as~~cash balance accounts of these employees receive no additional pay-based credits; however, the accounts continue to receive monthly interest credits at an annual interest rate equal to the change in the CPI-U plus two percent (with a ~~prorated portion~~minimum of ~~any LTR grant~~4.75 percent and a maximum of 6.25 percent). The interest rate during 2021 was 4.75 percent. The 401(k) plan automatic, non-elective contribution is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of eligible compensation, for a maximum matching contribution of six percent of eligible compensation. None of the NEOs are in this group.

•Employees who were hired prior to July 1, 2014, and who elected to waive their cash balance retirement benefit and transfer their cash balance account to the 401(k) plan effective October 1, 2018, receive a retirement benefit in the 401(k) plan only. The 401(k) plan is an automatic, non-elective contribution that ~~had~~is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of the eligible compensation, for a maximum matching contribution of six percent of eligible compensation. None of the NEOs are in this group.

•Employees who were first hired on or after July 1, 2014 (or who were rehired and were either previously not vested atin the ~~time~~pension plan or cashed out their pension benefit) receive a retirement benefit in the 401(k) plan only. The 401(k) plan automatic, non-elective contribution is equal to 4.5 percent of eligible compensation, and the ~~participant's separation from service, provided that~~matching contribution is $0.75 on every dollar contributed by the ~~LTR award will be prorated based on~~employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation. Mr. Lyash, Mr. Rausch, Mr. Fountain, and Mr. Moul are in this group.

Cash Balance Pension. For NEOs who are eligible for retirement benefits under the ~~number of whole months the participant was employed by TVA during the vesting period in~~pension plan, which ~~the participant separated from service as compared to (a) 12 months for the vesting period that~~ includes ~~the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service,~~Mr. Thomas and ~~(c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.~~

~~(8) In the event of retirement,~~ Mr. Skaggs, ~~will receive $870,000 upon retirement, two-thirds of~~eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the ~~actual LTP award that vests on September 30, 2020, and one-third of the actual LTP award that vests on September 30, 2021.~~

~~(9) The LTIP provides that~~column titled "Salary" in the ~~event~~Summary Compensation Table. The eligible compensation in 2021 could not exceed $285,000 pursuant to the IRS annual compensation limit applicable to qualified plans. Employees with cash balance benefits who have at least five years of cash balance service are eligible at retirement or termination of employment to receive an immediate benefit in the ~~death~~form of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participatingmonthly pension with survivor benefit options or in ~~the plan during the applicable performance cycle.~~

~~(11) Amounts that Mr. Skaggs earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.~~

Sherry A. Quirk Retirement/Resignation Termination without Cause Termination with Cause Death Disability
Severance Agreement⁽¹⁾
$ —
$ 541,049
$ —
$ —
$ —

SERP —
⁽²⁾
—
⁽²⁾
—
⁽²⁾
749,598
^(3)
(4)
749,598
⁽³⁾
EAIP 439,340
439,340
439,340
439,340
439,340

LTR 266,666
266,666
266,666
394,721
⁽⁵⁾
394,721
⁽⁶⁾
LTP 783,000
783,000
783,000
1,461,333
⁽⁷⁾
1,461,333
⁽⁸⁾
Deferred Compensation —
—
—
—
—

Total Value of Potential Payments $ 1,489,006
$ 2,030,055
$ 1,489,006
$ 3,044,992
$ 3,044,992

~~Notes~~

~~(1) In December 2014, TVA entered into an arrangement with Ms. Quirk that provides~~ a lump-sum payment ~~equal~~with cash out or rollover options. The pension plan does not provide for early retirement benefits to ~~one year's~~any NEO or any other employee eligible for cash balance benefits.

~~(2)~~Summary Compensation Table. The ~~five-year vesting requirement has~~eligible compensation in 2021 could not ~~been met.~~

~~(3) Represents the present value of the accumulated benefit.~~

~~(4) In the event of death while employed by TVA, the beneficiary would receive a lump sum payment equal~~exceed $285,000 pursuant to the ~~actuarial equivalent of the benefit that would have been paid had the~~IRS annual compensation limit applicable to qualified plans. Any participant ~~terminated employment on the date of death and elected a joint and 50 percent survivor benefit. Survivor will receive 50 percent of the reported value.~~

~~(5) The LTIP provides that~~ in the ~~event~~401(k) plan must have three years of ~~the death of a participant, the participant's beneficiary is entitled~~TVA service to ~~any portion of a LTR award that had~~be vested ~~at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation~~in matching and non-elective contributions from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.TVA.

(6) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(7) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(8) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

Timothy Rausch Retirement/Resignation Termination without Cause Termination with Cause Death Disability
Severance Agreement⁽¹⁾
$ —
$ —
$ —
$ —
$ —

SERP —
⁽²⁾
—
⁽²⁾
—
⁽²⁾
72,784
^(3)
(4)
72,784
⁽³⁾
EAIP 406,000
406,000
406,000
406,000
406,000

LTR 57,750
57,750
57,750
105,875
⁽⁵⁾
105,875
⁽⁶⁾
LTP —
—
—
134,750
⁽⁷⁾
134,750
⁽⁸⁾
Deferred Compensation —
—
—
—
—

Total Value of Potential Payments $ 463,750
$ 463,750
$ 463,750
$ 719,409
$ 719,409

~~Notes~~

~~(1) Mr. Rausch does not have a severance agreement with TVA.~~

~~(2) The five-year vesting requirement has not been met.~~

~~(3) Represents the present value of the accumulated benefit.~~

(4) In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivor benefit. Survivor will receive 50 percent of the reported value.

(5) The LTIP provides that in the event of the death of a participant, the participant’s beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant’s death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant’s separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(6) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant’s separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(7) The LTIP provides that in the event of the death of a participant, the participant’s beneficiary is entitled to (1) any LTP award that had vested at the time of the participant’s death but not been paid and (2) any LTP awards that had not vested at the time of the participant’s death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(8) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant’s separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant’s separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

~~Post-Retirement Payments for Mr. Johnson~~

William D. Johnson ⁽¹⁾
Payments for 2019
Estimated Payments
After 2019

Severance Agreement $ —
$ —

SERP 2,053,334
⁽²⁾
7,862,385
⁽³⁾
EAIP 1,170,915
⁽⁴⁾
—

LTR 522,414
⁽⁴⁾
—

LTP 2,425,103
⁽⁴⁾
1,715,341
⁽⁵⁾
Deferred Compensation —
—

Total Value $ 6,171,766
$ 9,577,726

~~Notes~~


~~(1)~~	~~Mr. Johnson retired from TVA on May 2, 2019.~~


~~(2)~~	~~Represents the first SERP benefit installment (one of five) paid within 60 days following retirement.~~


~~(3)~~	~~Represents the present value of the accumulated benefit, as of September 30, 2019, to be paid in four remaining annual installments.~~


~~(4)~~	~~The payment will be made in November or December of 2019.~~


~~(5)~~	Mr. Johnson will receive 19/36ths of the actual LTP award that vests on September 30, 2020, and 7/36ths of the actual LTP award that vests on September 30, 2021. Assuming 100 percent payout, these amounts will be $1,221,938 and $493,403, respectively.

~~Other Agreements~~

~~Except as described above and in the Compensation Discussion and Analysis, there are no other agreements between TVA and any of the NEOs.~~

CEO Pay Ratio Disclosure

•The total compensation for the CEO position for ~~2019~~2021 was ~~$15,099,142. This amount equals the total compensation for Mr. Johnson (former CEO) and Mr. Lyash (current CEO) as reported in the Summary Compensation table.~~$9,882,680.

•For ~~2019, Mr. Johnson's annual total compensation was $6,935,619.~~

~~For 2019, Mr. Lyash's annual total compensation was $8,163,523.~~

~~For 2019,~~2021, the median employee's annual total compensation was ~~$134,749.~~

$139,953.

Based on this information, the pay ratio of the total compensation for the CEO position to the median employee was approximately ~~112~~71 to 1.

To identify the median employee and to determine the annual total compensation of the median employee, ~~and Mr. Lyash and Mr. Johnson,~~ TVA took the following steps:

•TVA selected September 30, ~~2019~~2021, as the date on which to identify its median employee. On September 30, ~~2019,~~2021, TVA's employee population (including full-time, part-time, and temporary employees) consisted of ~~11,013~~10,129 individuals located in the U.S.

•In order to identify the median employee from its employee population, TVA compared the compensation that would be included in Box 5 (Medicare Wages and Tips) of Form W-2, which includes salary, overtime, and incentive compensation, for the period from October 1, ~~2018~~2020 to September 30, ~~2019.~~2021. Box 5 compensation was used as it is representative of the compensation received by all employees and is readily available and objective.

•After identifying its median employee, TVA calculated that employee's compensation for ~~2019~~2021 as though that compensation ~~were~~was being calculated for purposes of the Summary Compensation Table, resulting in annual total compensation of ~~$134,749.~~

$139,953.

2021 CEO Pay Ratio Below Median Among Peers

As reflected above, TVA's CEO target TDC is low compared to its 2021 compensation peer group on an absolute basis but is also low compared to its peers in the context of organizational pay ratios. As discussed fully under "CEO Pay Ratio Disclosure", the pay ratio of the total compensation for Mr. Lyash to the median TVA employee was approximately 71 to 1 for 2021. Based on TVA's 2021 pay ratio and the pay ratio disclosed in its peers' most recent public disclosures, TVA's pay ratio is below the 50th percentile. Peers used are those shown under Proxy Peer Group of Investor-Owned Utilities in the List of Compensation Peer Companies.

2021 CEO PAY RATIO VS. PEERS

2021 NEO Pay Decisions and Compensation Scorecards

The following pages show each NEO's 2021 Total Direct Compensation earned, 2021 TDC opportunities granted, and the Committee's (or the CEO's in the case of NEOs other than the CEO) rationale for those pay decisions.

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JEFFREY J. LYASH President and CEO Joined TVA April 2019									2021 TOTAL DIRECT COMPENSATION EARNED $7,454,730 Base Salary. Mr. Lyash's salary was increased 3.97 percent to $1,100,000 for 2021, reflecting superior performance and positioning to a more competitive base salary. This amount is below the 2021 compensation peer group median. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The TVA Board approved an Individual Performance Multiplier of 125 percent for Mr. Lyash for 2021 given his superior performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Earned. Mr. Lyash earned $754,300 in 2021 upon the vesting of the 2021 tranches of his 2020 and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Lyash was granted a 2021–2023 LTP program award with a target opportunity of $2,914,100, which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Lyash was granted a 2021 LTR program award of $1,248,900 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Lyash was paid $292,000 in 2021 as the third tranche of a deferred cash recruitment and relocation incentive under his employment offer letter. This incentive was intended to compensate him for amounts he forfeited from his previous employer in order to join TVA, as well as to provide some measure of substitute compensation in light of his not being eligible to earn any long-term performance incentive payments until September 2021.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •TVA has maintained its high level of service and employees continued to deliver outstanding performance in all strategic areas of the company through the COVID-19 pandemic. •Outstanding system performance experienced during the record winter storm and summer heat wave. •Effective planning and response to COVID-19 through Pandemic Response Team and union partnerships focused on enhanced safety, well-being, and communications to support the workforce. •Established an enterprise IwD to advise, champion, and oversee IwD strategies across TVA and the communities it serves. Increased diversity in leadership positions. •Developed TVA's Strategic Intent document to support internal alignment related to TVA's efforts around decarbonization and advanced innovation in energy supply. •Achieved 63% reduction in mass carbon emissions from 2005 baseline and working to obtain greater amounts of power supply from clean resources for further reductions. •Successfully facilitated the FY22 Budget Power Supply Plan. •Financial performance was strong, with debt reduced to the lowest level in 30 years, effective wholesale rates lowest in a decade, and lower interest expense in 2021 compared to 2020 mainly due to lower debt levels. •Strengthened customer relationships: 95% (145) of 153 LPCs have signed with TVA under 20-year Partnership Agreement. •The aggregate impact of these achievements was that TVA not only held rates stable and low, but returned $189 million in bill credits to LPCs participating in the long-term Partnership Agreement during 2021. •These achievements also enabled TVA to deliver a wide range of pandemic support programs to LPCs, businesses, and communities that lessened their burden and helped businesses across the Tennessee Valley recover. •Mr. Lyash's highest rated competencies were vision, innovation, and strategic direction, effective communication, and accountability and driving for results.

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JOHN M. THOMAS, III Executive Vice President and Chief Financial and Strategy Officer Joined TVA November 2005									2021 TOTAL DIRECT COMPENSATION EARNED $3,133,714 Base Salary. Mr. Thomas' salary was increased three percent to $686,582 at the beginning of 2021, reflecting strong performance and positioning to maintain a competitive base salary. Mr. Thomas’ salary was also increased 11.4 percent to $765,000 in June 2021 reflecting additional scope and responsibilities with his job title change to Executive Vice President and Chief Financial and Strategy Officer. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 105 percent for Mr. Thomas for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Awards Earned. Mr. Thomas earned $413,667 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Thomas was granted a 2021–2023 LTP program award with a target opportunity of $1,000,000. Effective June 7, 2021, Mr. Thomas was awarded a prorated 2021-2023 LTP grant of $1,039,000, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $1,000,000 made on October 1, 2020. The actual payout of the award will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Thomas was granted a 2021 LTR program award of $432,000. Effective June 7, 2021, Mr. Thomas was awarded a prorated 2021 LTR award of $441,000 which replaced the 2021 LTR program award of $432,000 made on October 1, 2020, that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Executed CFO, strategic planning, and business planning functions at an exceptionally high level, delivering results that exceeded enterprise goals in O&M expense, debt reduction, net income, and cash flow. •After assuming leadership for the Technology and Innovation units in 2020, quickly developed a comprehensive technology strategy including initiatives focused on transportation electrification, regional grid transformation, and expansion of TVA's solar power program, producing excellent 2021 results. For example, the industry-leading Green Invest Program resulted in more than 2,000 MWs of solar development across the Valley. •Continued to effectively manage revenue loss risk presented by the COVID-19 pandemic by working across the organization to manage O&M expense, adjust capital spending, and develop and extend a range of LPC and community support programs. These programs included direct fund matching to communities through the Community Care Fund and support through the Back-to-Business Credit program. •Effectively managed TVA liquidity, access to debt markets, and liability management activities to maintain TVA's strong financial position and lower interest expense. •Continued to successfully build TVA's ESG programs and communicate them effectively to stakeholders, including the financial community, executing TVA's first Investor ESG day. •Executed major bond issuance, including TVA's first ever Green Bonds that garnered the lowest 10-year rate in TVA history. •Continued to reduce TVA debt, achieving the lowest level in 30 years. •Total number of Long-Term Partnership Agreements increased in 2021, which returned $189 million to participating LPCs in 2021. •A key leader in delivering organizational financial performance that was the foundation for providing TVA customers with a 2.5% Pandemic Relief Credit on their monthly bills in 2021, and creating a Pandemic Recovery Credit of 2.5% for application throughout 2022. •Continued to mature the TVA Enterprise Risk Management Program, delivering superior risk insights contributing to material risk reduction. •In partnership with a range of internal organizations, developed and brought to the TVA Board a Carbon-informed Asset plan and a Strategic Intent and Guiding Principles Document that lay the foundation of TVA's greenhouse gas reduction glide path while maintaining low cost and high reliability.

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TIMOTHY S. RAUSCH Executive Vice President and Chief Nuclear Officer Joined TVA October 2018									2021 TOTAL DIRECT COMPENSATION EARNED $1,938,804 Base Salary. Mr. Rausch's salary was increased three percent to $551,668 for 2021, reflecting solid performance and positioning to maintain a competitive base salary. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 105 percent for Mr. Rausch for 2021 given his solid performance and notable achievements, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Payments Earned. Mr. Rausch earned $277,750 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program award. The LTR program award vests ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Rausch was granted a 2021–2023 LTP program award with a target opportunity of $500,000, which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Rausch was granted a 2021 LTR program award of $330,000 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Effectively led strong TVA nuclear fleet progress towards best-in-class operation, substantially improving nuclear fleet performance metrics and making solid progress toward the enterprise objective that all nuclear units achieve top quartile performance in 2022. •Completed 2021 with zero recordable injuries to TVA nuclear employees, effective with October 8, 2021 recorded data. •Substantially strengthened nuclear safety culture and safety conscious work environment, including improvement of Employee Concerns Program effectiveness, leadership timeliness in addressing employee issues and workforce communication that were recognized by the NRC with the closure of work environment related open concerns. •Completed the Extended Power Uprate program at Browns Ferry Nuclear Plant that increased cost effective power output by 11 percent and received nuclear industry recognition for project excellence. •Completed a broad portfolio of investments that significantly improved nuclear fleet safety and reliability. •Demonstrated nuclear value by delivering high reliability of the nuclear fleet through extreme winter weather and during the high load summer season. •Completed a series of major nuclear plant refueling outages involving thousands of workers, largely on budget and on schedule despite challenges presented by the COVID-19 pandemic. •Led a team that continued to advance the company's new nuclear program focused on deployment of light water Small Modular Reactors, which is a critical milestone in the development of this zero carbon generating resource. In addition, formed a partnership focused on development of next generation reactors including construction of a molten fluoride salt test reactor at Oak Ridge. •Championed the enterprise IwD Initiative, increasing diversity in the nuclear organization and mentoring the enterprise IwD Leadership Council.

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DAVID B. FOUNTAIN Executive Vice President and General Counsel (effective March 2021; former Senior Vice President, Vice General Counsel) Joined TVA June 2020									2021 TOTAL DIRECT COMPENSATION EARNED $1,074,607 Base Salary. Mr. Fountain’s salary was increased 3.5 percent to $465,750 at the beginning of 2021 reflecting his superior performance and positioning to maintain a competitive base salary. Mr. Fountain’s salary was also increased 15.9 percent to $540,000 in March 2021, with his selection as Executive Vice President and General Counsel. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 100 percent for Mr. Fountain for 2021 given his solid performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Award Payments Earned. Mr. Fountain did not participate in the 2019-2021 LTP program, and thus did not receive any LTP payout in 2021. Long-Term Retention Award Payments Earned. Mr. Fountain earned $105,500 in 2021 as the first tranche of his 2021 LTR program. The 2021 LTR award vests ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Fountain was granted a 2021-2023 LTP program award with a target opportunity of $375,000. Effective March 5, 2021, Mr. Fountain was awarded a prorated 2021-2023 LTP grant of $562,500, which will vest on September 30, 2023, and replaced the 2021-2023 LTP grant of $375,000. The actual payout of the award will depend on performance against targets at the end of a three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Fountain was granted a 2021 LTR program award of $249,000. Effective with the March 5, 2021 selection, Mr. Fountain was awarded a prorated 2021 LTR award of $316,500 which replaced the 2021 LTR program award of $249,000 made on October 1, 2020, and vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Fountain was paid $100,000 in 2021 as the second installment of a deferred cash relocation incentive under his employment offer letter and $350,000 as the second installment of a deferred cash recruitment incentive under his employment offer letter.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Effectively led the activities of the Office of the General Counsel ("OGC) across multiple areas of law, including nuclear, regulatory, commercial, environmental, litigation, employment, natural resources, and others. •Served a critical role as an insightful, strategic, and trusted advisor to the Enterprise Leadership Team and to the TVA Board. •Counseled the enterprise through a variety of novel legal challenges including challenges to the public power model established by the TVA Act and a favorable decision in the Nuclear Development lawsuit related to the disposition of the Bellefonte Nuclear Plant site. •As Corporate Secretary supported the TVA Board in developing and implementing changes intended to strengthen the company's governance and improve transparency, including restructuring Board Committees. •As Vice General Counsel, led TVA's response to Executive Orders and interactions with other federal offices that successfully resolved significant issues and built confidence and trust. •Continued to successfully support the organization in developing the basis and structure of the portfolio of COVID-19 pandemic-related programs delivered across the TVA service area. •Took significant steps to strengthen the TVA Ethics Program, including completion of a comprehensive program assessment and development of a long-term improvement plan •Successfully completed the transition of the OGC organization from the prior General Counsel, building employee confidence and engagement. •Expanded the OGC's pro-bono legal support initiative that is positively impacting lives in support of TVA's mission of service.

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DONALD A. MOUL Executive Vice President and Chief Operating Officer Joined TVA June 2021									2021 TOTAL DIRECT COMPENSATION EARNED $854,831 Base Salary. Mr. Moul’s salary was approved as $765,000 commensurate with his employment on June 21, 2021 as Executive Vice President and Chief Operating Officer. Salary earned in 2021 was $205,962. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVA Board approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 115 percent for Mr. Moul for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Award Payments Earned. Organizational performance under the 2019–2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Award Payments Earned. Mr. Moul earned $327,084 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020 and 2021 LTR program awards. The LTR awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective with his hire, Mr. Moul was granted a prorated 2021-2023 LTP program award with a target opportunity of $588,750 which will vest on September 30, 2023. The actual payout of the award will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective with his hire, Mr. Moul was granted a prorated 2021-2023 LTR program award of $588,750 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above. Other Compensation Recruitment and Relocation Incentive. Mr. Moul was paid $650,000 in 2021 as the first installment of a deferred cash recruitment and relocation incentive under his employment offer letter.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Completed a highly successful 100-day Chief Operating Officer transition plan that maintained operational quality, built employee confidence, and effectively completed the turnover of the Chief Operating Officer position with Mr. Skaggs coincident with the end of the fiscal year. •Effectively engaged with the staff and coordinated system and river operations activities through a significant rainfall year and the highest load period in nearly a decade without customer interruption or price instability. •Quickly acclimated to the TVA organization, culture, and operation and established himself as an effective senior executive. •Completed an extensive program of customer and stakeholder outreach to establish the constructive relationships needed to effectively lead the enterprise, receiving strong positive stakeholder feedback on this critical executive turnover. •Effectively led organizational response to a series of COVID-related Executive Orders in a manner that satisfied these directives without disrupting performance. •Led the organizational response to a tragic contract employee fatality, supporting the responsible contract partner company in their investigation and ensuring that TVA learned all appropriate lessons and took timely improvement actions.

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MICHAEL D. SKAGGS Executive Vice President and Advisor to the Chief Operating Officer (effective June 2021; former Executive Vice President and Chief Operating Officer) Joined TVA February 1994									2021 TOTAL DIRECT COMPENSATION EARNED $3,335,868 Base Salary. Mr. Skaggs's salary was increased four percent to $689,936 for 2021, reflecting strong performance and positioning to maintain a competitive base salary. EAIP Payment Earned. Organizational performance under the TVA EAIP Scorecard exceeded target for all measures, resulting in a 142 percent payout percentage. Company performance under the TVA Corporate Multiplier measures was strong for nearly all measures despite the continued challenges presented by COVID-19. As a result, the TVABoard approved a 1.0 Corporate Multiplier. The CEO approved an Individual Performance Multiplier of 115 percent for Mr. Skaggs for 2021 given his strong performance, including those considerations noted under 2021 Individual Performance Highlights. Long-Term Incentives Earned Long-Term Performance Awards Earned. Organizational performance under the 2019-2021 LTP program was stronger than expected in key operational measures, resulting in significantly lower than expected Non-Fuel Delivered Cost of Power and Load Not Served. However, several external measures were below target. In light of strong safety, reliability, and financial performance, the TVA Board determined that the 132 percent calculated payout appropriately reflected executive performance in executing on TVA's long-term priorities and did not exercise its discretion to adjust the payout. Long-Term Retention Awards Earned. Mr. Skaggs earned $451,000 in 2021 upon the vesting of the 2021 tranches of his 2019, 2020, and 2021 LTR program awards, respectively. The LTR program awards vest ratably over a three-year period, subject to continued employment on each vesting date. Long-Term Incentive Opportunities Granted 2021–2023 Long-Term Performance Award Opportunity. Effective October 1, 2020, Mr. Skaggs was granted a 2021–2023 LTP program award with a target opportunity of $1,175,000 which will vest on September 30, 2023. Actual payout will depend on performance against targets at the end of the three-year performance period. 2021 Long-Term Retention Award Opportunity. Effective October 1, 2020, Mr. Skaggs was granted a 2021 LTR program award of $504,000 that vests ratably over a three-year period, subject to continued employment on each vesting date. The first tranche was earned in 2021 as described above.

2021 INDIVIDUAL PERFORMANCE HIGHLIGHTS •Led the operational teams to the best industrial safety performance in TVA history for the second consecutive year, with top quartile Serious Injury Rate and top decile OSHA Injury Rate. •Provided exceptional reliability during two extreme cold and heat-related weather events, delivering high generating station performance, strong transmission system performance, and outstanding system management. •In partnership with a range of internal organizations, developed and brought to the TVA Board a Carbon-informed Asset plan and a Strategic Intent and Guiding Principles Document that lay the foundation of TVA's greenhouse gas reduction glide path while maintaining low cost and high reliability. •Continuously improved transmission reliability in 2021, again setting industry performance standards, and resulting in more reliable and higher-quality power delivery to industrial customers, LPCs, and communities. •Led significant improvement of non- nuclear generation fleet performance in 2021, exceeding aggressive goals and contributing to lower fuel costs and considerable savings to customers. •Progressed the Grid of Tomorrow program, which is focused on building the integrated energy system of the future, on schedule and on budget. •Continued to build TVA's ESG program and issued TVA's second Sustainability Report, clearly communicating TVA's leadership position in this important dimension of corporate stewardship. •Led improvement efforts for critical support functions of supply chain, environmental programs, and security. •Evaluated, assisted in lessons learned incorporation, and provided meaningful mentorship for the Watts Bar Unit 2 Nuclear Plant Steam Generator Project. •Advised the TVA nuclear team in developing the Small Modular Reactor program, a key to achieving future carbon reduction goals.

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Executive Compensation Tables and Narrative Disclosures

Summary Compensation and Grants of Plan-Based Awards

The following table provides information on compensation earned by each of the NEOs in 2021 (and 2020 and 2019, as applicable).

SUMMARY COMPENSATION TABLE


Name and Principal Position	Year	Salary		Bonus(1)		Non-Equity Incentive Plan Compensation(2)			Change in Pension Value and Nonqualified Deferred Compensation Earnings(3)			All Other Compensation(4)		Total
Jeffrey J. Lyash	2021	$	1,100,000	$	—	$	6,354,730		$	2,110,300		$	317,650	$	9,882,680
President and Chief	2020	1,058,000		—		2,729,609		(5)	2,271,647		(6)	1,237,977		7,297,233
Executive Officer	2019	445,846		380,000		861,969		(7)	5,970,873		(8)	504,835		8,163,523
John M. Thomas, III	2021	$	710,711	$	—	$	2,423,003		$	767,504		$	21,375	$	3,922,593
Executive Vice President and	2020	666,584		—		2,210,410		(9)	980,220		(10)	21,000		3,878,214
Chief Financial and Strategy Officer	2019	648,208		52,500		1,804,797		(11)	1,076,752		(12)	20,625		3,602,882
Timothy Rausch	2021	$	551,668	$	—	$	1,387,136		$	237,895		$	25,650	$	2,202,349
Senior Vice President	2020	535,600		—		1,031,390		(13)	106,428		(14)	159,794		1,833,212
and Chief Nuclear Officer	2019	502,000		—		713,750		(15)	72,784		(16)	255,735		1,544,269
David Fountain	2021	$	507,444	$	—	$	567,163		$	4,167		$	479,295	$	1,558,069
Executive Vice President	2020	—		—		—			—			—		—
and General Counsel	2019	—		—		—			—			—		—
Donald Moul	2021	$	205,962	$	—	$	648,869		$	—		$	678,098	$	1,532,929
Executive Vice President	2020	—		—		—			—			—		—
and Chief Operating Officer	2019	—		—		—			—			—		—
Mike D. Skaggs	2021	$	689,936	$	—	$	2,645,932		$	1,223,557		$	12,825	$	4,572,250
Executive Vice President	2020	663,400		—		2,150,295		(17)	1,609,999		(18)	12,600		4,436,294
and Advisor to the CEO	2019	614,692		52,500		1,716,194		(19)	2,017,130		(20)	12,375		4,412,891

Notes

(1) There were no bonus awards in 2021.

(2) The 2021 data is outlined in the table below.

NON-EQUITY INCENTIVE PLAN COMPENSATION


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain		Donald Moul		Michael D. Skaggs
EAIP	$	2,928,750	$	847,736	$	575,776	$	461,663	$	235,435	$	901,332
LTP	2,671,680		1,161,600		533,610		—		86,350		1,293,600
LTR 2019-03(A)	—		126,667		57,750		—		21,806		140,000
LTR 2020-02(B)	338,000		140,000		110,000		—		109,028		143,000
LTR 2021-01(C)	416,300		147,000		110,000		105,500		196,250		168,000

Total	$	6,354,730	$	2,423,003	$	1,387,136	$	567,163	$	648,869	$	2,645,932

Notes

(A) LTR grant representing the third tranche of the LTR award effective October 1, 2018.

(B) LTR grant representing the second tranche of the LTR award effective October 1, 2019.

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(3) The 2021 data is outlined in the table below.

CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain		Donald Moul		Michael D. Skaggs
Increase under TVARS Plans	$	—	$	17,652	$	—	$	—	$	—	$	41,797
Increase under SERP	2,110,300		749,852		237,895		4,167		—		1,181,760
Total	$	2,110,300	$	767,504	$	237,895	$	4,167	$	—	$	1,223,557

(4) The 2021 data is outlined in the table below.

ALL OTHER COMPENSATION


	Jeffrey J. Lyash		John M. Thomas, III		Timothy Rausch		David Fountain			Donald Moul			Michael D. Skaggs
401(k) Matching Contribution	$	12,825	$	12,825	$	12,825	$	12,825		$	7,944		$	12,825
Non-Elective 401(k) Contribution	12,825		8,550		12,825		12,825			9,268			—
Deferred Cash Recruitment/Relocation Incentive	292,000		—		—		450,000		(A)	650,000		(B)	—
Relocation Benefits	—		—		—		3,645			10,886			—
Total	$	317,650	$	21,375	$	25,650	$	479,295		$	678,098		$	12,825

Notes

(5) Represents $2,391,609 awarded under the EAIP and $338,000 awarded under the LTR.

(6) Reflects increase of $2,271,647 under the SERP.

(7) Represents $861,969 awarded under the EAIP.

(8) Reflects increase of $5,970,873 under the SERP.

(9) Represents $730,576 awarded under the EAIP, $1,096,500 awarded under the LTP, and $383,334 awarded under the LTR.

(10) Reflects increases of $34,401 under the Cash Balance Pension and $945,819 under the SERP.

(11) Represents $660,630 awarded under the EAIP, $817,500 awarded under the LTP, and $326,667 awarded under the LTR.

(12) Reflects increases of $60,304 under the Cash Balance Pension and $1,016,448 under the SERP.

(13) Represents $513,640 awarded under the EAIP, $167,750 awarded under the LTR, and $350,000 awarded under a Performance Incentive Arrangement.

(14) Reflects increase of $106,428 under the SERP.

(15) Represents $406,000 awarded under the EAIP, $57,750 awarded under the LTR, and $250,000 awarded under a Performance Incentive Arrangement.

(16) Reflects increase of $72,784 under the SERP.

(17) Represents $799,795 awarded under the EAIP, $967,500 awarded under the LTP, and $383,000 awarded under the LTR.

(18) Reflects increases of $55,129 under the Cash Balance Pension and $1,554,870 under the SERP.

(19) Represents $575,360 awarded under the EAIP, $817,500 awarded under the LTP, and $323,334 awarded under the LTR.

(20) Reflects increases of $91,600 under the Cash Balance Pension and $1,925,530 under the SERP.

The following table provides information on non-equity incentive plan opportunities and grants provided to NEOs and the possible range of payouts associated with the opportunities and grants. Awards under the EAIP, LTP, and LTR that vested as of September 30, 2021, will be paid in cash during the first quarter of 2022.

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GRANTS OF PLAN-BASED AWARDS TABLE

as of September 30, 2021


			Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)							Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
			Current Year							Future Years
Name	Plan		Threshold(2)		Target(2)		Maximum(2)			Threshold(2)		Target(2)		Maximum(2)			Performance Period Ending/Vesting Date
Jeffrey J. Lyash	EAIP	(3)	$	825,000	$	1,650,000	$	2,475,000									9/30/2021
	LTP 2019	(4)	1,012,000		2,024,000		3,036,000										9/30/2021
	LTR 2020-02	(5)			338,000		338,000										9/30/2021
	LTR 2021-01	(5)			416,300		416,300										9/30/2021
	LTP 2020	(6)								$	1,170,500	$	2,341,000	$	3,511,500		9/30/2022
	LTR 2020-03	(5)										338,000		338,000			9/30/2022
	LTR 2021-02	(5)										416,300		416,300			9/30/2022
	LTP 2021	(7)								1,457,050		2,914,100		4,371,150			9/30/2023
	LTR 2021-03	(5)										416,300		416,300			9/30/2023

John M. Thomas, III	EAIP	(3)	$	284,284	$	568,568	$	852,852									9/30/2021
	LTP 2019	(4)	440,000		880,000		1,320,000										9/30/2021
	LTR 2019-03	(5)			126,667		126,667										9/30/2021
	LTR 2020-02	(5)			140,000		140,000										9/30/2021
	LTR 2021-01	(5)			147,000		147,000										9/30/2021
	LTP 2020	(6)								$	490,000	$	980,000	$	1,470,000		9/30/2022
	LTR 2020-03	(5)										140,000		140,000			9/30/2022
	LTR 2021-02	(5)										147,000		147,000			9/30/2022
	LTP 2021	(7)								519,500		1,039,000		1,558,500			9/30/2023
	LTR 2021-03	(5)										147,000		147,000			9/30/2023


Timothy Rausch	EAIP	(3)	$	193,084	$	386,168	$	579,252									9/30/2021
	LTP 2019	(4)	202,125		404,250		606,375										9/30/2021
	LTR 2019-03	(5)			57,750		57,750										9/30/2021
	LTR 2020-02	(5)			110,000		110,000										9/30/2021
	LTR 2021-01	(5)			110,000		110,000										9/30/2021
	LTP 2020	(6)								$	250,000	$	500,000	$	750,000		9/30/2022
	LTR 2020-03	(5)										110,000		110,000			9/30/2022
	LTR 2021-02	(5)										110,000		110,000			9/30/2022
	LTP 2021	(7)								250,000		500,000		750,000			9/30/2023
	LTR 2021-03	(5)										110,000		110,000			9/30/2023


David Fountain	EAIP	(3)	$	162,557	$	325,114	$	487,672									9/30/2021
	LTR 2021-01	(5)			105,500		105,500										9/30/2021
	LTP 2020	(6)								$	187,500	$	375,000	$	562,500		9/30/2022
	LTR 2021-02	(5)										105,500		105,500			9/30/2022
	LTP 2021	(7)								281,250		562,500		843,750			9/30/2023
	LTR 2021-03	(5)										105,500		105,500			9/30/2023






Donald Moul	EAIP	(3)	$	72,087	$	144,173	$	216,260									9/30/2021
	LTP 2019	(4)	32,709		65,417		98,126		(8)								9/30/2021
	LTR 2019-03	(5)			21,806		21,806		(9)								9/30/2021
	LTR 2020-02	(5)			109,028		109,028		(10)								9/30/2021
	LTR 2021-01	(5)			196,250		196,250		(11)								9/30/2021
	LTP 2020	(6)								$	163,542	$	327,083	$	490,625	(12)	9/30/2022
	LTR 2020-03	(5)										109,028		109,028		(10)	9/30/2022
	LTR 2021-02	(5)										196,250		196,250		(11)	9/30/2022
	LTP 2021	(7)								294,375		588,750		883,125		(13)	9/30/2023
	LTR 2021-03	(5)										196,250		196,250		(11)	9/30/2023

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Michael D. Skaggs	EAIP	(3)	$	275,975	$	551,949	$	827,924							9/30/2021
	LTP 2019	(4)	490,000		980,000		1,470,000								9/30/2021
	LTR 2019-03	(5)			140,000		140,000								9/30/2021
	LTR 2020-02	(5)			143,000		143,000								9/30/2021
	LTR 2021-01	(5)			168,000		168,000								9/30/2021
	LTP 2020	(6)							$	495,000	$	990,000	$	1,485,000	9/30/2022
	LTR 2020-03	(5)									143,000		143,000		9/30/2022
	LTR 2021-02	(5)									168,000		168,000		9/30/2022
	LTP 2021	(7)							587,500		1,175,000		1,762,500		9/30/2023
	LTR 2021-03	(5)									168,000		168,000		9/30/2023

Notes

(1) TVA does not have any equity securities and therefore has no equity-based awards.

(3) Target incentive opportunities as a percentage of salaries were as follows: Mr. Lyash, 150 percent; Mr. Thomas, 80 percent; Mr. Rausch, 70 percent; Mr. Fountain, 70 percent; Mr. Moul, 70 percent; and Mr. Skaggs, 80 percent. Additionally, a corporate multiplier ranging between 0.00 and 1.00 may be applied which can reduce the award to $0. An individual performance multiplier of up to 150 percent may also be applied which may increase the award to 225 percent of target. Actual EAIP awards earned for performance in 2021 are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table. See Compensation Discussion and Analysis for a discussion of how each award was determined. Mr. Thomas and Mr. Fountain's target incentive opportunities are prorated based on the number of days worked in each position during the performance cycle. Mr. Moul did not work a full year, and his target incentive opportunity is prorated based on the numbers of days worked in the performance cycle.

(4) Mr. Lyash's LTP award was granted October 1, 2019, and vested September 30, 2021. Mr. Moul's LTP award was granted as part of his employment offer and vested September 30, 2021. All other LTP awards were granted October 1, 2018, and vested September 30, 2021. At the end of the performance period, TVA's LTIP Scorecard was applied to the grants in order to determine award payouts. Award payouts are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table. Mr. Fountain did not participate in the 2019-2021 LTP program.

(5) All LTR awards will be paid in a lump sum within two months of the September 30th vesting date. The awards will be paid in cash after deducting applicable federal, state, and local withholding taxes. In the case of death, the beneficiary will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant's death. Disability awards will be paid as soon as administratively practicable but in no event later than the last day of the second full calendar month following the participant's separation from service due to disability. Actual LTR awards earned in 2021 are reported for each of the NEOs under the "Non-Equity Incentive Plan Compensation" column in the Summary Compensation Table.

(6) Mr. Fountain's LTP award was granted as part of his employment offer and will vest September 30, 2022. Mr. Moul's LTP award was granted as part of his employment offer and will vest September 30, 2022. All other LTP awards were granted effective October 1, 2019 and will vest September 30, 2022. At the end of the performance period, TVA's LTIP Scorecard will be applied to the grants in order to determine award payouts. The final award may be adjusted by the TVA Board based on the evaluation of the participant's individual achievements, peer group comparisons, and performance results over the performance cycle.

(8) Reflects prorated amount of 3/36th of the target grant amount of $785,000 for the 2019-2021 LTP performance cycle.

(9) Reflects prorated amount of 3/36th of the LTR grant of $785,000 for the 2019-2021 retention cycle.

(10) Reflects prorated amount of 15/36th of the LTR grant of $785,000 for the 2020-2022 retention cycle.

(11) Reflects prorated amount of 27/36th of the LTR grant of $785,000 for the 2021-2023 retention cycle.

(12) Reflects prorated amount of 15/36th of the target grant amount of $785,000 for the 2020-2022 LTP performance cycle.

(13) Reflects prorated amount of 27/36th of the target grant amount of $785,000 for the 2021-2023 LTP performance cycle.

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Retirement and Pension Plans

The table below provides the actuarial present value of the NEOs' accumulated benefits, including the number of years of credited service, under TVA's retirement and pension plans as of September 30, 2021, determined using a methodology and interest rate and mortality rate assumptions consistent with those used in the financial statements in this Annual Report, set forth in Note 22 —Benefit Plans.

PENSION BENEFITS TABLE


Name	Plan Name	Number of Years of Credited Service(1)		Present Value of Accumulated Benefit			Payments During Last Year
Jeffrey J. Lyash	TVARS	N/A		N/A		(3)	$	—
	SERP Tier 1	12.417	(2)	$	10,352,820		—
John M. Thomas, III	TVARS	15.833		429,601			—
	SERP Tier 1	15.833		5,384,711			—
Timothy Rausch	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	2.917		417,107			—
David Fountain	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	1.333		4,167			—
Donald Moul	TVARS	N/A		N/A		(3)	—
	SERP Tier 1	0.250		—			—
Michael D. Skaggs	TVARS	27.583		814,475			—
	SERP Tier 1	24.000	(4)	9,075,757			—

Notes

(1) Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below.

(2) Mr. Lyash was granted five years of credited service for calculating his SERP benefit. In the event of involuntary termination except for cause prior to five years of actual service, the vesting requirement will be waived, and he will be entitled to the additional five years of granted credited service plus his actual years of service for calculating his SERP benefit. In the event of termination for cause or voluntary termination for any reason prior to five years of actual service, the vesting requirement will be waived and his SERP benefit will be calculated based on a total of five years of credited service. After five years of actual service with TVA, he will be granted five additional years of credited service for a total of 15 years of credited service for calculating his SERP benefit. As of September 30, 2021, Mr. Lyash had 2.417 years of service. The present value of the accumulated SERP benefit with 7.417 years of credited services is $6,156,339. The present value of the accumulated SERP benefit with 12.417 years of credited service is $10,352,820.

(3) Mr. Lyash, Mr. Rausch, Mr. Fountain, and Mr. Moul are not eligible to participate in the TVARS Pension Plan since they were hired after June 30, 2014.

(4) Mr. Skaggs has reached the 24-year service cap allowed under the SERP.

Qualified Retirement Plans

•Employees who were first hired prior to January 1, 1996, and who elected to switch pension structures from traditional to cash balance, receive (i) a cash balance pension benefit calculated based on (a) pay-based credits and interest that accrue over time in the employee's account and (b) the employee's age at the time of retirement, and (ii) 401(k) plan matching contributions from TVA. The monthly pay credits are equal to six percent of eligible compensation, and monthly interest is credited at an annual interest rate equal to the change in the CPI-U plus three percent (with a minimum of six percent and maximum of 10 percent). The interest rate during 2021 was six percent. The 401(k) plan matching contribution is $0.75 on every dollar contributed by the employee up to six percent of eligible compensation, for a maximum matching contribution of 4.5 percent of eligible compensation. Mr. Skaggs is in this group.

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•Employees who were first hired on or after January 1, 1996, and who had less than 10 years of service as of October 1, 2016, receive (i) a cash balance pension benefit calculated based on pay-based credits and interest that accrue over time in the employee's account and the employee's age at the time of retirement, and (ii) 401(k) plan non-elective and matching contributions from TVA. As of October 1, 2016, the cash balance accounts of these employees receive no additional pay-based credits; however, the accounts continue to receive monthly interest credits at an annual interest rate equal to the change in the CPI-U plus two percent (with a minimum of 4.75 percent and a maximum of 6.25 percent). The interest rate during 2021 was 4.75 percent. The 401(k) plan automatic, non-elective contribution is equal to six percent of eligible compensation, and the matching contribution is dollar-for-dollar on employee contributions up to six percent of eligible compensation, for a maximum matching contribution of six percent of eligible compensation. None of the NEOs are in this group.

Cash Balance Pension. For NEOs who are eligible for retirement benefits under the pension plan, which includes Mr. Thomas and Mr. Skaggs, eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the column titled "Salary" in the Summary Compensation Table. The eligible compensation in 2021 could not exceed $285,000 pursuant to the IRS annual compensation limit applicable to qualified plans. Employees with cash balance benefits who have at least five years of cash balance service are eligible at retirement or termination of employment to receive an immediate benefit in the form of a monthly pension with survivor benefit options or in a lump-sum payment with cash out or rollover options. The pension plan does not provide for early retirement benefits to any NEO or any other employee eligible for cash balance benefits.

401(k) Plan. All employees eligible to participate in the 401(k) plan, including the NEOs, may elect to contribute to the 401(k) plan on a before-tax, Roth, and/or after-tax basis. For purposes of matching and non-elective contributions from TVA to the 401(k) accounts of the NEOs, eligible compensation is defined as annual salary only for benefit calculation purposes and is shown under the column titled "Salary" in the Summary Compensation Table. The eligible compensation in 2021 could not exceed $285,000 pursuant to the IRS annual compensation limit applicable to qualified plans. Any participant in the 401(k) plan must have three years of TVA service to be vested in matching and non-elective contributions from TVA.

Supplemental Executive Retirement Plan

All NEOs are participants in the SERP. The SERP is a non-qualified defined benefit pension plan similar to those typically found in other companies in TVA's peer group and is provided to a limited number of executives, including the NEOs. TVA's SERP was created to recruit and retain key executives. The plan is designed to provide a competitive level of retirement benefits in excess of the limitations on contributions and benefits imposed by TVA's qualified defined benefit plan and Internal Revenue Code Section 415 limits on qualified retirement plans.

Under the SERP, normal retirement eligibility is age 62 with five years of vesting service. No vested and accrued benefits are payable prior to age 55, and benefits are reduced for retirements prior to age 62. The level of reduction in benefits for retirements prior to age 62 depends on whether a participant's termination is "approved" or "unapproved." In the event of an approved termination of TVA employment, any vested and accrued benefits are reduced by 5/12 percent for each month that the date of benefit commencement precedes the participant's 62nd birthday, up to a maximum reduction of 35 percent. In the event of an unapproved termination of TVA employment, the participant's accrued benefits are first subject to a reduced percentage of vesting if the participant's years of service are between five and 10. At five years of vesting service, the vested percentage of retirement benefits is 50 percent and increases thereafter by 10 percent for each full additional year of service, reaching 100 percent vesting for 10 or more years of vesting service. Thereafter, any vested and accrued benefits are reduced by 10/12

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percent for each month that the date of benefit commencement precedes the participant's 62nd birthday up to a maximum reduction of 70 percent.

For purposes of the SERP, an "approved" termination means termination of employment with TVA due to (i) retirement on or after the participant's 62nd birthday, (ii) retirement on or after attainment of actual age 55, if such retirement has the approval of the TVA Board or its delegate, (iii) death in service as an employee, (iv) disability (as defined under the Rules and Regulations of the TVARS) as determined by the Retirement Committee, or (v) any other circumstance approved by the TVA Board or its delegate. For purposes of the SERP, an "unapproved" termination means a termination of employment with TVA when such termination does not constitute an "approved" termination as defined in the preceding sentence.

SERP Tier 1. The Tier 1 structure is designed to replace 60 percent of the amount of a participant's compensation at the time the participant reaches age 62 and has accrued 24 years of TVA service. Tier 1 benefits are based on a participant's highest average compensation during three consecutive SERP years and a pension multiple of 2.5 percent for each year of credited service up to a maximum of 24 years. Compensation is defined as salary and EAIP for benefit calculation purposes. Tier 1 benefits are offset by Social Security benefits, benefits provided under TVA's qualified defined benefit pension plan, and prior employer pension benefits when applicable.

SERP Tier 2. The purpose of this restoration plan is to adjust qualified plan benefits to executives when benefits are lost due to IRS limits. Pension benefits are based on a participant's average compensation over three consecutive fiscal years and a pension multiplier of 1.3 percent for each year of service. For benefit calculation, pension includes salary and annual incentives.

Nonqualified Deferred Compensation

The following table provides information regarding deferred contributions, earnings, and balances for each of the NEOs. The amounts reported under this table do not represent compensation in addition to the compensation that was earned in 2021 and already reported in the Summary Compensation Table, but rather the amounts of compensation earned by the NEOs in 2021 or prior years that were or have been deferred.

NONQUALIFIED DEFERRED COMPENSATION TABLE


Name	Executive Contributions in 2021		Registrant Contributions in 2021		Aggregate Earnings in 2021			Aggregate Withdrawals/ Distributions		Aggregate Balance at September 30, 2021
Jeffrey J. Lyash	$	—	$	—	$	—		$	—	$	—
John M. Thomas, III	—		—		—			—		—
Timothy Rausch	—		—		—			—		—
David Fountain	—		—		—			—		—
Donald Moul	—		—		—			—
Michael D. Skaggs	—		—		694,097		(1)	—		6,041,126		(2)

Notes

(1) Includes vested earnings. Because none of the amounts are above market or preferential earnings under SEC rules, none of these amounts are included in the Summary Compensation Table.

(2) Includes vested contributions and earnings. $600,000 of this amount has been reported in the Summary Compensation Table as compensation for a prior fiscal year.

TVA's compensation plans may allow participants to defer all or a portion of compensation earned under the plans as defined by plan terms and IRS regulations. All deferrals are credited to each participant in a deferred compensation account, and the deferral amounts are then funded into a rabbi trust. Each participant may elect one or more investment options made available by TVA or allow some or all funds to accrue interest at the rate established by the beginning of each fiscal year equal to the composite rate of all Treasury issues. Participants may elect to change from either one notional investment option or the TVA interest bearing option to another at any time. Upon termination of employment, funds are distributed pursuant to elections made in accordance with applicable IRS regulations.

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Executive Severance Plan

On February 10, 2021, TVA’s CEO established the TVA Executive Severance Plan (the “Severance Plan”), including the eligibility of TVA’s NEOs (other than the CEO) to participate in the Severance Plan. On February 11, 2021, the TVA Board approved the CEO’s participation in the Severance Plan as part of the overall market review of CEO compensation. The Severance Plan provides that if TVA terminates an NEO’s employment other than for Gross Misconduct (as defined below) or such participant terminates employment for Good Reason (as defined below), such participant will be eligible to receive the following benefits in addition to his or her accrued compensation:

•A lump sum severance payment equal to the applicable multiplier times the sum of the employee’s annual base salary and target annual incentive, and continued healthcare benefits for a number of complete or partial years equal to such multiplier. The applicable multiplier is 1.5 for the CEO and 1.0 for the other NEOs, or, if the qualifying separation occurs within 24 months following a Change in Control (as defined below) of TVA, then the applicable multiplier is 3.0 for the CEO and 2.0 for the other NEOs.

•Any earned but unpaid incentive payments, and a prorated annual incentive payment for the year of termination based on actual (or, if the qualifying separation occurs within 24 months following a Change in Control of TVA, based on target) achievement of performance goals.

•If the qualifying separation occurs within 24 months following a Change in Control of TVA, then a lump sum cash payment equal to the sum of (a) any LTIP performance awards the performance cycle of which is in progress on the participant's separation date, non-prorated and calculated based on target achievement of performance goals, and (b) any LTIP retention awards the retention cycle of which is in progress on the participant's separation date, non-prorated and calculated as if all such awards are fully vested.

•If the qualifying separation occurs within 24 months following a Change in Control of TVA, a waiver of the five-year vesting requirement set forth in Section 4.1(a) of the TVA Supplemental Executive Retirement Plan pursuant to its terms.

In order to receive severance benefits under the Severance Plan, participants must timely execute (and not revoke) a release of claims in favor of TVA and comply with all applicable post-separation restrictive covenants. The terms of the Severance Plan will supersede rights and obligations with respect to severance under existing agreements to which Severance Plan participants are a party.

Under the Severance Plan, a Change in Control shall be deemed to have occurred on the earliest of the following dates:

•the date when the United States ceases to have an ownership interest of at least fifty percent (50%) of TVA;

•the date one or more entities acquire (or have acquired during the 12-month period ending on the date of the most recent acquisition by such entity or entities) assets from TVA that have a total gross fair market value (without regard to any debt) equal to or more than thirty percent (30%) of the total gross fair market value of all of the assets of TVA immediately before such most recent acquisition;

•the date that a majority of the members of the TVA Board is no longer appointed and confirmed in accordance with the provisions of Section 2(a)(1) of the TVA Act;

•the date a complete liquidation or winding-up of TVA is consummated;

•the date that an entity such as an organization, board, commission, authority, department, or agency succeeds to the principal functions of, or powers and duties granted to, TVA; or

•the date of enactment or effectiveness of any applicable law, statute, rule, regulation, order, decree, ruling, or writ of a governmental or regulatory agency, entity, or official of competent jurisdiction that materially limits the TVA Board’s authority to establish or renew a participant’s total direct compensation.

Under the Severance Plan, Good Reason shall mean the occurrence of any of the following:

•a material adverse change in the participant’s authority, duties, or responsibilities (excluding during any period of participant’s physical or mental incapacity) with respect to his or her employment with TVA without the participant’s prior written consent;

•a material reduction in the participant’s base salary without the participant’s prior written consent (other than any reduction applicable to management employees generally);

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•an actual change in the participant’s principal work location by more than 50 miles and more than 50 miles from the participant’s principal place of abode as of the date of such change in job location without the participant’s prior written consent; or

•a material breach by TVA of any term or provision of the Severance Plan without the participant’s prior written consent.

A participant may be considered to have Good Reason to terminate employment for purposes of the Severance Plan only if the participant provides written notice to TVA of termination within 30 days of the occurrence of the applicable event(s) or, if later, within 30 days of the date the participant has knowledge that such event(s) occurred. An event constituting Good Reason shall no longer constitute Good Reason if the circumstances described in the Good Reason notice are cured by TVA within 30 days following receipt of the Good Reason notice.

Under the Severance Plan, Gross Misconduct shall mean any of the following:

•misconduct involving dishonesty, fraud, or gross negligence that directly results in significant economic or reputational harm to TVA;

•insubordination, intentional neglect of duties, or refusal to cooperate with investigations of TVA’s business practices;

•conviction of a crime amounting to a felony under the laws of the United States or any of the several states, or a crime of moral turpitude;

•a significant violation of TVA’s Code of Ethics or Code of Conduct; or

•disclosure without authorization of proprietary or confidential information of TVA.

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Potential Payments on Account of Resignation, Retirement, Termination without Cause, Termination with Cause, Death, or Disability

The tables below show certain potential payments that would have been made to each NEO if his or her employment had been terminated on September 30, 2021, under various scenarios. All of the NEOs would also be entitled to payments from plans generally available to TVA employees under the specific circumstances of termination of employment, including the health and welfare and pension plans and amounts in the 401(k) plan.


Jeffrey J. Lyash	Resignation(1)		Retirement			Termination without Cause or Resignation for Good Reason (Non-CIC)(2)		Termination without Cause or Resignation for Good Reason (CIC)(2)		Termination with Cause		Death/Disability
Severance Agreement	$	—	$	—		$	4,125,000	$	8,250,000	$	—	$	—
SERP(3)	4,046,300		4,046,300			6,156,339		6,156,339		4,046,300		6,156,339		(4)
EAIP	2,928,750		2,928,750			2,928,750		2,928,750		2,928,750		2,928,750
Deferred Cash Recruitment/Relocation Incentive(5)	292,000		292,000			292,000		292,000		292,000		292,000
LTR	754,300		754,300			754,300		1,924,900		754,300		1,270,217		(6) (7)
LTP	2,671,680		2,671,680		(8)	2,671,680		7,926,780		2,671,680		5,203,713		(9) (10)
Deferred Compensation	—		—			—		—		—		—
Total Value of Potential Payments	$	10,693,030	$	10,693,030		$	16,928,069	$	27,478,769	$	10,693,030	$	15,851,019

Notes

(1) The Resignation column covers resignations that do not qualify as resignations for Good Reason under TVA's Severance Plan. See Executive Compensation Tables and Narrative Disclosures - Executive Severance Plan for definition of Good Reason.

(2) The Severance Plan provides that if TVA terminates an NEO's employment other than for Gross Misconduct or such participant terminates employment for Good Reason, such participant will be eligible to receive certain benefits in addition to his or her accrued compensation. The amount of additional benefits will vary depending on whether the qualifying separation from service occurs within 24 months following a Change in Control. See Executive Compensation Tables and Narrative Disclosures - Executive Severance Plan for definitions of Gross Misconduct, Good Reason, and Change in Control and for a discussion of the benefits provided to NEOs under the Severance Plan.

(3) In February 2019, TVA entered into an arrangement with Mr. Lyash that provides that at the commencement of his employment with TVA, he will be granted five years of credited service for calculating his SERP benefit. In the event of involuntary termination except for cause prior to five years of actual service, the vesting requirement will be waived, and he will be entitled to the additional five years of granted credited service plus his actual years of service for calculating his SERP benefit. In the event of termination for cause or voluntary termination for any reason prior to five years of actual service, the vesting requirement will be waived and his SERP benefit will be calculated based on a total of five years of credited service.

(5) Mr. Lyash received a deferred cash recruitment/relocation Incentive of $1,784,000 upon employment, and $292,000 of this amount vested on September 30, 2021.

(6) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(8) Is not eligible to retire based on definition in the LTIP plan.

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John M. Thomas, III	Resignation(1)			Retirement			Termination without Cause or Resignation for Good Reason (Non-CIC)(2)			Termination without Cause or Resignation for Good Reason (CIC)(2)			Termination with Cause			Death/Disability
Severance Agreement(1)	$	—		$	—		$	1,377,000		$	2,754,000		$	—		$	—
SERP	5,384,711		(3)(4)(5)	5,384,711		(3) (4) (5)	5,384,711		(3) (4) (5)	5,384,711		(3) (4) (5)	5,384,711		(3) (4) (5)	5,384,711		(3) (4) (6)
EAIP	847,736			847,736			847,736			847,736			847,736			847,736
LTR	413,667			413,667			413,667			847,667			413,667			606,167		(7) (8)
LTP	1,161,600			2,161,267		(9)	2,161,267			3,180,600			1,161,600			2,161,267		(10) (11)
Deferred Compensation	—			—			—			—			—			—
Total Value of Potential Payments	$	7,807,714		$	8,807,381		$	10,184,381		$	13,014,714		$	7,807,714		$	8,999,881

Notes

(3) Represents the present value of the accumulated benefit.

(4) Actual benefit would be paid in five annual installments beginning at age 55.

(5) Assumes that the TVA Board or its delegate determines that the termination is an approved termination under SERP. See Executive Compensation Tables and Narrative Disclosures — Retirement and Pension Plans — Supplemental Executive Retirement Plan above for a discussion of approved and unapproved terminations under SERP.

(6) In the event of death while employed by TVA, the beneficiary would receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivor benefit. Survivor will receive 50 percent of the reported value.

(7) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(8) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(9) The LTIP provides that in the event of the retirement of a participant, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated using the actual percent of opportunity achieved and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle. The amount included in the table assumes that the percent of opportunity achieved will be 100 percent of target for the performance cycles ending on September 30, 2022 and September 30, 2023.

(10) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(11) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

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Timothy Rausch	Resignation(1)			Retirement			Termination without Cause or Resignation for Good Reason (Non-CIC)(2)			Termination without Cause or Resignation for Good Reason (CIC)(2)			Termination with Cause			Death/Disability
Severance Agreement	$	—		$	—		$	937,836		$	1,875,671		$	—		$	—
SERP	—		(3)	—		(3)	—		(3)	417,107		(4)	—		(3)	417,107		(5) (6)
EAIP	575,776			575,776			575,776			575,776			575,776			575,776
LTR	277,750			277,750			277,750			607,750			277,750			424,417		(8) (9)
LTP	533,610			533,610		(7)	533,610			1,533,610			533,610			1,033,610		(10) (11)
Deferred Compensation	—			—			—			—			—			—
Total Value of Potential Payments	$	1,387,136		$	1,387,136		$	2,324,972		$	5,009,914		$	1,387,136		$	2,450,910

Notes

(3) The five-year vesting requirement has not been met.

(4) The Severance Plan provides that the five-year vesting requirement set forth in Section 4.1(a) of the SERP will be waved pursuant to the terms of such section with respect to each participant whose termination date occurs within 24 months following a Change in Control.

(5) Represents the present value of the accumulated benefit.

(6) In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivor benefit. Survivor will receive 50 percent of the reported value.

(7) Is not eligible to retire based on definition in the LTIP plan.

(8) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to any portion of a LTR award that had vested at the time of the participant's death but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award for each vesting period will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

(9) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to any portion of a LTR award that had vested at the time of the separation from service but not been paid as well as a prorated portion of any LTR grant that had not vested at the time of the participant's separation from service, provided that the LTR award will be prorated based on the number of whole months the participant was employed by TVA during the vesting period in which the participant separated from service as compared to (a) 12 months for the vesting period that includes the day that the participant separated from service, (b) 24 months for the vesting period that immediately follows the vesting period during which the participant separated from service, and (c) 36 months for the second vesting period that follows the vesting period during which the participant separated from service.

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David Fountain	Resignation(1)			Retirement			Termination without Cause or Resignation for Good Reason (Non-CIC)(2)			Termination without Cause or Resignation for Good Reason (CIC)(2)			Termination with Cause			Death/Disability
Severance Agreement	$	—		$	—		$	918,000		$	1,836,000		$	—		$	—
SERP	—		(3)	—		(3)	—		(3)	4,167		(4)	—		(3)	4,167		(5) (6)
EAIP	461,663			461,663			461,663			461,663			461,663			461,663
Deferred Cash Recruitment/Relocation Incentive	—		(7)	—		(7)	—			—			—		(7)	—
LTR	105,500			105,500			105,500			316,500			105,500			193,417		(8) (9)
LTP	—			—		(10)	—			937,500			—			437,500		(11) (12)
Deferred Compensation	—			—			—			—			—			—
Total Value of Potential Payments	$	567,163		$	567,163		$	1,485,163		$	3,555,830		$	567,163		$	1,096,747

Notes

(3) The five-year vesting requirement has not been met.

(5) Represents the present value of the accumulated benefit.

(7) Under the terms of his offer letter, Mr. Fountain is required to repay to TVA deferred cash relocation incentive payments in the amount of $150,000 if, prior to June 1, 2022, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) is terminated for cause. Mr. Fountain is required to repay to TVA deferred cash relocation incentive payments in the amount of $100,000 if, prior to June 1, 2023, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) is terminated for cause.

(10) Is not eligible to retire based on definition in the LTIP plan.

(11) The LTIP provides that in the event of the death of a participant, the participant's beneficiary is entitled to (1) any LTP award that had vested at the time of the participant's death but not been paid and (2) any LTP awards that had not vested at the time of the participant's death and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was participating in the plan during the applicable performance cycle.

(12) The LTIP provides that if a participant separates from service due to a disability, the participant is entitled to (1) any LTP award that had vested at the time of the participant's separation from service but not been paid and (2) any LTP awards that had not vested at the time of the participant's separation from service and that covered a performance cycle for which the participant had received a LTP grant, provided that the amount of any such LTP award (a) will be calculated assuming that the percent of opportunity achieved is 100 percent of target and (b) will be prorated based on the number of whole months the participant was employed by TVA during the applicable performance cycle.

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Donald Moul	Resignation(1)			Retirement			Termination without Cause or Resignation for Good Reason (Non-CIC)(2)		Termination without Cause or Resignation for Good Reason (CIC)(2)		Termination with Cause			Death/Disability
Severance Agreement	$	—		$	—		$	1,300,500	$	2,601,000	$	—		$	—
SERP	—		(3)	—		(3)	—		—		—		(3)	—		(4) (5)
EAIP	235,435			235,435			235,435		235,435		235,435			235,435
Deferred Cash Recruitment/Relocation Incentive	—		(6)	—		(6)	—		—		—		(6)	—
LTR	327,084			327,084			327,084		828,612		327,084			545,140		(8) (9)
LTP	86,350			86,350		(7)	86,350		1,002,183		86,350			500,656		(10) (11)
Deferred Compensation	—			—			—		—		—			—
Total Value of Potential Payments	$	648,869		$	648,869		$	1,949,369	$	4,667,230	$	648,869		$	1,281,231

Notes

(3) The five-year vesting requirement has not been met.

(4) Represents the present value of the accumulated benefit.

(5) In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivor benefit. Survivor will receive 50 percent of the reported value.

(6) Under the terms of his offer letter, Mr. Moul is required to repay to TVA deferred cash recruitment and relocation incentive payments in the amount of $650,000 if, prior to June 21, 2023, he (1) voluntarily terminates employment unless the separation is for reasons beyond his control and acceptable to TVA, or (2) is terminated for cause.

(7) Is not eligible to retire based on definition in the LTIP plan.

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Michael D. Skaggs	Resignation(1)			Retirement			Termination without Cause or Resignation for Good Reason (Non-CIC)(2)			Termination without Cause or Resignation for Good Reason (CIC)(2)			Termination with Cause			Death/Disability
Severance Agreement	$	—		$	—		$	1,241,885		$	2,483,770		$	—		$	—
SERP	9,075,757		(3) (4) (5)	9,075,757		(3) (4) (5)	9,075,757		(3) (4) (5)	9,075,757		(3) (4) (5)	9,075,757		(3) (4) (5)	9,075,757		(3) (4) (6)
EAIP	901,332			901,332			901,332			901,332			901,332			901,332
LTR	451,000			451,000			451,000			930,000			451,000			662,500		(7) (8)
LTP	1,293,600			2,345,267		(9)	2,345,267			3,458,600			1,293,600			2,345,267		(10) (11)
Deferred Compensation(12)	6,041,126			6,041,126			6,041,126			6,041,126			6,041,126			6,041,126
Total Value of Potential Payments	$	17,762,815		$	18,814,482		$	20,056,367		$	22,890,585		$	17,762,815		$	19,025,982

Notes

(3) Represents the present value of the accumulated benefit.

(4) Actual benefit would be paid in ten annual installments beginning on the date of Mr. Skaggs's separation from service.

(12) Amounts that Mr. Skaggs earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.

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Other Agreements

Except as described above and in the Compensation Discussion and Analysis, there are no other agreements between TVA and any of the NEOs.

Director Compensation

The TVA Act provides for up to nine directors on the TVA Board. As of November ~~14, 2019,~~12, 2021, the TVA Board consisted of ~~nine~~seven members. Under the TVA Act, each director receives certain stipends that are increased annually by the same percentage increase applicable to adjustments under 5 U.S.C. ��§ 5318, which adjusts the annual rates of pay of employees on the Executive Schedule of the U.S. Government. Effective January ~~6, 2019,~~1, 2021, the annual stipend for TVA directors was increased from $54,072 to ~~$52,702~~$54,613 per year unless (1) the director chairs a TVA Board committee, in which case the stipend was increased from $55,142 to ~~$53,745~~$55,693 per year, or (2) the director is the Chair of the TVA Board, in which case the stipend was increased from $60,175 to ~~$58,650~~$60,777 per year. Directors are also reimbursed under federal law for travel, lodging, and related expenses while attending meetings and for other official TVA business.

The annual stipends provided by the TVA Act for each director and for the Chair of the TVA Board as of November ~~14, 2019,~~12, 2021, are listed below:

TVA BOARD ANNUAL STIPENDS

TVA Board Annual Stipends

Name
Annual Stipend
James R. Thompson, III $ 58,650
Kenneth E. Allen 52,702
A. D. Frazier 52,702
Richard B. Howorth 53,745
William Kilbride 52,702
Virginia T. Lodge 53,745
John L. Ryder 53,745
Jeff W. Smith 53,745
Ronald A. Walter 53,745


Name	Annual Stipend
William Kilbride	$	60,777
Kenneth E. Allen	55,693
A. D. Frazier	55,693
Beth Harwell	55,693
Brian Noland	54,613
John L. Ryder	54,613
Jeff W. Smith	55,693

The following table provides information on the compensation received by TVA's directors during ~~2019:~~2021:

Director Compensation
Name Fees Earned or Paid in Cash
Stock
Awards
Option
Awards
Non-Equity
Incentive Plan
Compensation
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings⁽¹⁾
All Other Compensation⁽²⁾
Total
James R. Thompson, III $ 54,993
— — — — $ 546
$ 55,539
Kenneth E. Allen 52,174
— — — — 520
52,694
A. D. Frazier 52,174
— — — — 2,599
54,773
Richard C. Howorth 56,277
— — — — 2,813
59,090
William B. Kilbride 7,596
— — — — 74
7,670
Virginia T. Lodge 53,207
— — — — 2,650
55,857
John L. Ryder 28,202
— — — — 1,118
29,320
Jeff W. Smith 53,207
— — — — 2,385
55,592
Ronald A. Walter 53,207
— — — — 530
53,737
DIRECTOR COMPENSATION


Name	Fees Earned or Paid in Cash		Stock Awards	Option Awards	Non-Equity Incentive Plan Compensation	Change in Pension Value and Nonqualified Deferred Compensation Earnings(1)	All Other Compensation(2)		Total
William B. Kilbride	$	55,997	—	—	—	—	$	560	$	56,557
Kenneth E. Allen	55,528		—	—	—	—	555		56,083
A. D. Frazier	55,528		—	—	—	—	2,776		58,304
Beth Harwell	40,447		—	—	—	—	2,022		42,469
Brian Noland	39,910		—	—	—	—	1,995		41,905
John L. Ryder	60,027		—	—	—	—	2,401		62,428
Jeff W. Smith	55,528		—	—	—	—	2,499		58,027

Notes

(1) TVA directors do not participate in the TVARS Retirement Plans, TVA's SERP, or any non-qualified deferred compensation plan available to TVA employees. However, as appointed officers of the U.S. government, the directors are members of FERS. FERS is administered by the federal Office of Personnel Management, and information regarding the value of FERS pension benefits is not available to TVA.

(2) These amounts include TVA's non-elective and matching contributions to the ~~TSP.~~

Thrift Savings Plan.

The directors are not eligible to participate in any incentive programs available to TVA employees. The directors do not participate in the TVARS Retirement Plans and do not participate in TVA's SERP. However, as appointed officers of the U.S. government, the directors are members of the Federal Employees Retirement System ("FERS"). FERS is a tiered retirement plan that includes three components: (1) Social Security benefits, (2) the Basic Benefit Plan, and (3) the Thrift Savings Plan ("TSP"). As members of FERS, each director is required to make a mandatory percentage contribution of his or her stipend to

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the Basic Benefit Plan in the amount of 0.8 percent for those directors appointed prior to January 1, 2013, 3.1 percent for those directors appointed between January 1, 2013, and December 31, 2013, and 4.4 percent for those directors appointed on or after January 1, 2014.

The FERS Basic Benefit Plan is a qualified defined benefit plan that provides a retirement benefit based on a final average pay formula that includes age, highest average salary during any three consecutive years of service, and years of creditable service. A director must have at least five years of creditable service to be eligible to receive retirement benefits. Directors are eligible for immediate, unreduced retirement benefits once (1) they reach age 62 and have five years of FERS creditable service, (2) they reach age 60 and have 20 years of FERS creditable service, or (3) they attain the minimum retirement age and accumulate the specified years of service as set forth in the FERS regulations. Generally, benefits are calculated by multiplying 1.0 percent of the highest average salary during any three consecutive years of service by the number of years of creditable service. Directors who retire at age 62 or later with at least 20 years of FERS creditable service receive an enhanced benefit (a factor of 1.1 percent is used rather than 1.0 percent).

Each director is also eligible to participate in the TSP. The TSP is a tax-deferred retirement savings and investment plan that offers the same type of savings and tax benefits offered under 401(k) plans. Once a director becomes eligible, TVA contributes an amount equal to one percent of the director's stipend into a TSP account for the director. These contributions are made automatically every two weeks regardless of whether the director makes a contribution of his or her own money. Directors are eligible to contribute up to the TSP elective deferral limit. Directors receive matching contributions of 100 percent of each dollar for the first three percent of the director's stipend and 50 percent of each dollar for the next two percent of the director's stipend.

TVA offers a group of health and other benefits (medical, dental, vision, life and accidental death and disability insurance, and long-term disability insurance) that are available to a broad group of employees. Directors are eligible to participate in TVA's health benefit plans and other non-retirement benefit plans on the same terms and at the same contribution rates as other TVA employees.

Compensation Committee Interlocks and Insider Participation

The People and ~~Performance~~Governance Committee of the TVA Board currently consists of the following ~~four~~three directors: ~~Virginia T. Lodge, Ronald A. Walter, James R. Thompson, III,~~Kenneth Allen, A.D. Frazier, and ~~Kenneth Allen.~~Brian Noland.

No member of this Committee was at any time during 2021 or at any other time an officer or employee of TVA, and no member of this committee had any relationship with TVA requiring disclosure under Item 404 of Regulation S-K. No executive officer of TVA ~~serves~~has served on the board of andirectors or compensation committee of any other entity that has anor has had one or more executive ~~officer serving~~officers who served as a ~~director~~member of ~~TVA.~~the People and Governance Committee during 2021.

Compensation Committee Report

The People and ~~Performance~~Governance Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, the Committee recommended to the TVA Board that the Compensation Discussion and Analysis be included in this Annual Report.

PEOPLE AND ~~PERFORMANCE~~GOVERNANCE COMMITTEE

~~Virginia T. Lodge, Chair~~

~~Ronald A. Walter~~

~~James R. Thompson, III~~

Kenneth Allen, ~~Chair-Elect~~Chair

A.D. Frazier

Brian Noland

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Not applicable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director Independence

The composition of the TVA Board is governed by the TVA Act. The TVA Act contains certain provisions that are similar to the considerations for independence under section 10A(m)(3) of the Exchange Act, including that to be eligible for appointment to the TVA Board, an individual shall not be an employee of TVA and shall make full disclosure to Congress of any investment or other financial interest that the individual holds in the energy industry.

Related Party Transactions

Conflict of Interest Provisions

All TVA employees, including directors and executive officers, are subject to the conflict of interest laws and regulations applicable to employees of the federal government. Accordingly, the general federal conflict of interest statute (18 U.S.C. § 208) and the Standards of Ethical Conduct for Employees of the Executive Branch (5 C.F.R. part 2635) ("Standards of Ethical Conduct") form the basis of TVA's policies and procedures for the review, approval, or ratification of related party transactions. The general federal conflict of interest statute, subject to certain exceptions, prohibits each government employee, including TVA's directors and executive officers, from participating personally and substantially (by advice, decision, or otherwise) as a government employee in any contract, controversy, proceeding, request for determination, or other particular matter in which, to his or her knowledge, he or she (or his or her spouse, minor child, general partner, organization with which he or she serves as officer, director, employee, trustee, or general partner, or any person or organization with which he or she is negotiating, or has an arrangement, for future employment) has a financial interest. Exceptions to the statutory prohibition relevant to TVA employees are (1) financial interests which have been deemed by the U.S. Office of Government Ethics, in published regulations, to be too remote or inconsequential to affect the integrity of the employee's services, or (2) interests which are determined in writing, after full disclosure and on a case-by-case basis, to be not so substantial as to be deemed likely to affect the integrity of the employee's services for TVA. In accordance with the statute, individual waiver determinations are made by the official responsible for the employee's appointment. In the case of TVA directors, the determination may be made by the Chair of the TVA Board, and in the case of the Chair of the TVA Board, the determination may be made by the Counsel to the President of the U.S.

More broadly, Subpart E of the Standards of Ethical Conduct provides that where an employee (1) knows that a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interests of a member of his or her household, or that a person with whom the employee has a "covered relationship" (which includes, but is not limited to, persons with whom the employee has a close family relationship and organizations in which the employee is an active participant) is or represents a party to the matter, and (2) determines that the circumstances would cause a reasonable person with knowledge of relevant facts to question his or her impartiality in the matter, the employee should not participate in the matter absent agency authorization. This authorization may be given by the employee's supervising officer, as agency designee, in consultation with the TVA Designated Agency Ethics Official, upon the determination that TVA's interest in the employee's

participation in the matter outweighs the concern that a reasonable person may question the integrity of TVA's programs and operations.

The previously described restrictions are reflected in TVA's policies which require employees, including directors and executive officers, to comply with the guidelines outlined in the Standards of Ethical Conduct and which restate the standard of the conflict of interest statute.

Additionally, the TVA Board approved a written conflict of interest policy that applies to all TVA employees, including TVA's directors and executive officers. The conflict of interest policy reaffirms the requirement that all TVA employees must comply with applicable federal conflict of interest laws, regulations, and policies. It also establishes an additional policy that is applicable to TVA's directors and CEO. This additional policy provides that TVA's directors and CEO shall not hold a financial interest in (1) any distributor of TVA ~~power,~~power; (2) any entity engaged primarily in the wholesale or retail generation, transmission, or sale of electricity, except where substantially all such business is conducted outside of North ~~America,~~America; or (3) 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. Any waiver of this additional policy may be made only by the TVA Board and will be disclosed promptly to the public, subject to the limitations on disclosure imposed by law.

TVA also has a protocol titled the "Obtaining Things of Value from TVA Protocol" (the "Protocol"). The Protocol describes what a TVA employee should do if a person covered by the Protocol asks for assistance in obtaining a specified thing of value from TVA. Similarly, the TVA Board Practice on External Inquiries describes what a member of the TVA Board should do if a person covered by the practice asks for assistance in obtaining a specified thing of value from TVA.

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TVA relies on the policies, practices, laws, and regulations discussed above to regulate conflicts of interest involving employees, including directors and executive officers. TVA has no other written or unwritten policy for the approval or ratification of any transactions in which TVA was or is to be a participant and in which any director or executive officer of TVA (or any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of any director or executive officer of TVA) had or will have a direct or indirect material interest.

Other Relationships

TVA is engaged in a number of transactions with other agencies of the U.S. government, although such agencies do not fall within the definition of "related parties" for purposes of Item 404(a) of Regulation S-K. These include, among other things, supplying electricity to other federal agencies, purchasing electricity from the Southeastern Power Administration, and engaging in various arrangements involving nuclear materials with the Department of Energy ("DOE"). See Item 1, Business and Note 2324 — Related Parties.

TVA also has access to a financing arrangement with the U.S. Treasury. TVA and the U.S. Treasury have a memorandum of understanding under which the U.S. Treasury provides TVA with a $150 million credit facility. There were no outstanding borrowings under the facility at September 30, ~~2019.~~2021. This credit facility ~~matures on~~has a maturity date of September 30, ~~2020,~~2022, and is ~~expected to be renewed.~~typically renewed annually. This arrangement is pursuant to the TVA Act. Access to this credit facility or other similar financing arrangements with the U.S. Treasury has been available to TVA since the 1960s. See Note 1314 — Debt and Other Obligations —Credit Facility Agreements.

In addition, TVA is required by the 1959 amendment to the TVA Act to make annual payments to the U.S. Treasury from net power proceeds as a repayment of and as a return on the 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") until $1.0 billion of the Power Program Appropriation Investment has been repaid. With the 2014 payment, TVA fulfilled its requirement to repay $1.0 billion of the Power Program Appropriation Investment. The TVA Act requires TVA to continue to make payments to the U.S. Treasury indefinitely as a return on the remaining $258 million of the Power Program Appropriation Investment. See Note 1819 — Proprietary Capital — Appropriation Investment.

The TVA Act requires the proceeds for each fiscal year derived from the sale of power or any other activities to be paid into the U.S. Treasury on March 31 of each year, except for the portion of such proceeds as in the opinion of the TVA Board shall be necessary for TVA in the operation of dams and reservoirs and in conducting its business in generating, transmitting, and distributing electric energy. For each fiscal year, the TVA Board adopts a resolution retaining for use in the operation of the TVA power system the entire margin of net power proceeds remaining at the conclusion of such fiscal year.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees of Ernst & Young LLP for audit, audit-related, and other services for the years ended September 30, ~~2019~~2021 and ~~2018.~~2020.


Principal Accountant Fees and Services (in actual dollars)	Principal Accountant Fees and Services (in actual dollars)									Principal Accountant Fees and Services (in actual dollars)
Year		Principal Accountant	Audit Fees⁽¹⁾		Audit-Related Fees		All Other Fees⁽²⁾	Total		Year	Principal Accountant	Audit Fees(1)		Audit-Related Fees		Tax Fees		All Other Fees(2)		Total
2019		Ernst & Young LLP	$	2,839,049	$	—	7,020	$	2,846,069
2018		Ernst & Young LLP	2,798,575		—		—	2,798,575
2021										2021	Ernst & Young LLP	$	3,115,531	$	—	$	—	$	3,060	$	3,118,591
2020										2020	Ernst & Young LLP	3,007,830		—		—		5,930		3,013,760



A corporate agency of the United States created by an act of Congress (State or other jurisdiction of incorporation or organization)									62-0474417 (IRS Employer Identification No.)

400 W. Summit Hill Drive Knoxville, Tennessee (Address of principal executive offices)									37902 (Zip Code)



Table of Contents
GLOSSARY OF COMMON ~~ACRONYMS.......................................................................................................................................................................................................~~ ACRONYMS.......................................................................................................................................................................................................		4
FORWARD-LOOKING ~~INFORMATION~~......................................................................................................................................................................................................... INFORMATION.........................................................................................................................................................................................................		6
GENERAL ~~INFORMATION~~............................................................................................................................................................................................................................ INFORMATION............................................................................................................................................................................................................................		78

PART I

ITEM 1. BUSINESS......................................................................................................................................................................................................................................		89
The ~~Corporation~~................................................................................................................................................................................................................................. Corporation.................................................................................................................................................................................................................................		89
Service ~~Area~~....................................................................................................................................................................................................................................... Area.......................................................................................................................................................................................................................................		910
~~Customers~~.......................................................................................................................................................................................................................................... COVID-19 Pandemic......................................................................................................................................................................................................................		1011
~~Rates~~.................................................................................................................................................................................................................................................. Customers..........................................................................................................................................................................................................................................		11
Rates..................................................................................................................................................................................................................................................		12
Power Supply and Load Management Resources.............................................................................................................................................................................		1113
Fuel ~~Supply~~......................................................................................................................................................................................................................................... Supply.........................................................................................................................................................................................................................................		1621
~~Transmission~~...................................................................................................................................................................................................................................... Transmission......................................................................................................................................................................................................................................		1923
Weather and ~~Seasonality~~.................................................................................................................................................................................................................... Seasonality....................................................................................................................................................................................................................		1924
~~Competition~~........................................................................................................................................................................................................................................ Competition........................................................................................................................................................................................................................................		2024
Research and ~~Development~~............................................................................................................................................................................................................... Development...............................................................................................................................................................................................................		2024
Flood Control ~~Activities~~....................................................................................................................................................................................................................... Activities.......................................................................................................................................................................................................................		2125
Environmental Stewardship ~~Activities.................................................................................................................................................................................................~~ Activities.................................................................................................................................................................................................		2126
Economic Development ~~Activities......................................................................................................................................................................................................~~ Activities......................................................................................................................................................................................................		2126
~~Regulation~~.......................................................................................................................................................................................................................................... Regulation..........................................................................................................................................................................................................................................		2226
Taxation and Tax ~~Equivalents~~............................................................................................................................................................................................................. Equivalents.............................................................................................................................................................................................................		2328
Environmental ~~Matters~~....................................................................................................................................................................................................................... Matters.......................................................................................................................................................................................................................		2328
~~Employees~~.......................................................................................................................................................................................................................................... Human Capital Management..............................................................................................................................................................................................................		2935

ITEM 1A. RISK ~~FACTORS~~............................................................................................................................................................................................................................ FACTORS............................................................................................................................................................................................................................		2941

ITEM 1B. UNRESOLVED STAFF ~~COMMENTS............................................................................................................................................................................................~~ COMMENTS............................................................................................................................................................................................		4254

ITEM 2. ~~PROPERTIES~~.................................................................................................................................................................................................................................. PROPERTIES..................................................................................................................................................................................................................................		4255
Generating ~~Properties~~........................................................................................................................................................................................................................ Properties........................................................................................................................................................................................................................		4255
Transmission ~~Properties~~..................................................................................................................................................................................................................... Properties.....................................................................................................................................................................................................................		4457
Natural Resource Stewardship ~~Properties.........................................................................................................................................................................................~~ Properties.........................................................................................................................................................................................		4457
~~Buildings~~............................................................................................................................................................................................................................................. Buildings.............................................................................................................................................................................................................................................		4457
Disposal of ~~Property~~........................................................................................................................................................................................................................... Property...........................................................................................................................................................................................................................		4457

ITEM 3. LEGAL ~~PROCEEDINGS~~.................................................................................................................................................................................................................. PROCEEDINGS..................................................................................................................................................................................................................		4558

ITEM 4. MINE SAFETY DISCLOSURES......................................................................................................................................................................................................		4558

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES............		4659

~~ITEM 6. SELECTED FINANCIAL DATA........................................................................................................................................................................................................~~		46

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................................................................		4759
Business and Mission.........................................................................................................................................................................................................................		4759
Executive Overview............................................................................................................................................................................................................................		4962
Results of Operations.........................................................................................................................................................................................................................		5062
Liquidity and Capital Resources.........................................................................................................................................................................................................		5868
Off-Balance Sheet Arrangements.......................................................................................................................................................................................................		6373
Key Initiatives and Challenges...........................................................................................................................................................................................................		6373
Critical Accounting ~~Policies and Estimates.........................................................................................................................................................................................~~ Estimates.........................................................................................................................................................................................		7085
Fair Value Measurements...................................................................................................................................................................................................................		75
New Accounting Standards and ~~Interpretations.................................................................................................................................................................................~~ Interpretations.................................................................................................................................................................................	7691
Legislative and Regulatory ~~Matters....................................................................................................................................................................................................~~ Matters....................................................................................................................................................................................................		7691
Environmental Matters.......................................................................................................................................................................................................................		7791
Legal Proceedings..............................................................................................................................................................................................................................		7792
Risk Management ~~Activities~~............................................................................................................................................................................................................... Activities...............................................................................................................................................................................................................		7792

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK...........................................................................................................................~~ RISK...........................................................................................................................		7994

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY ~~DATA..........................................................................................................................................................~~ DATA..........................................................................................................................................................		8095
Consolidated Balance Sheets............................................................................................................................................................................................................Statements of Operations.............................................................................................................................................................................................		8195
Consolidated ~~Statements of Operations~~Balance Sheets............................................................................................................................................................................................................~~.............................................................................................................................................................................................~~		8096
Consolidated Statements of Comprehensive Income (Loss).............................................................................................................................................................		8398
Consolidated Statements of Cash ~~Flows...........................................................................................................................................................................................~~ Flows...........................................................................................................................................................................................		8499



Consolidated Statements of Changes in Proprietary ~~Capital.............................................................................................................................................................~~ Capital.............................................................................................................................................................	85100
Notes to Consolidated Financial Statements.....................................................................................................................................................................................		86101
Report of Independent Registered Public Accounting ~~Firm...............................................................................................................................................................~~ Firm...............................................................................................................................................................		~~148~~161

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL ~~DISCLOSURE...............................................................~~ DISCLOSURE...............................................................		~~149~~163



ITEM 9A. CONTROLS AND ~~PROCEDURES...............................................................................................................................................................................................~~ PROCEDURES...............................................................................................................................................................................................		~~149~~163
Disclosure Controls and ~~Procedures..................................................................................................................................................................................................~~ Procedures..................................................................................................................................................................................................		~~149~~163
Internal Control over Financial ~~Reporting...........................................................................................................................................................................................~~ Reporting...........................................................................................................................................................................................		~~149~~163
Report of Independent Registered Public Accounting ~~Firm................................................................................................................................................................~~ Firm................................................................................................................................................................		~~150~~164

ITEM 9B. OTHER ~~INFORMATION~~................................................................................................................................................................................................................ INFORMATION................................................................................................................................................................................................................		~~151~~165

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE ~~GOVERNANCE.............................................................................................................................~~ GOVERNANCE.............................................................................................................................		~~152~~166
Directors..............................................................................................................................................................................................................................................		~~152~~166
Executive Officers...............................................................................................................................................................................................................................		~~153~~167
Disclosure and Financial Code of Ethics............................................................................................................................................................................................		~~155~~168
Committees of the TVA Board............................................................................................................................................................................................................		~~155~~168

ITEM 11. EXECUTIVE ~~COMPENSATION.....................................................................................................................................................................................................~~ COMPENSATION.....................................................................................................................................................................................................		~~155~~170
Compensation Discussion and Analysis.............................................................................................................................................................................................		~~155~~170
CEO Pay Ratio Disclosure.................................................................................................................................................................................................................		208
Executive Compensation Tables and Narrative Disclosures..............................................................................................................................................................		~~169~~215
Retirement and Pension Plans...........................................................................................................................................................................................................		~~173~~219
Nonqualified Deferred Compensation................................................................................................................................................................................................		~~176~~221
Potential Payments on Account of ~~Retirement/~~Resignation, Retirement, Termination without Cause, Termination with Cause, Death, or Disability...........................................		~~177~~224
Other Agreements..............................................................................................................................................................................................................................		~~182~~230
CEO Pay Ratio Disclosure.................................................................................................................................................................................................................Director Compensation.......................................................................................................................................................................................................................		~~182~~230
Director Compensation.......................................................................................................................................................................................................................		~~183~~
Compensation Committee Interlocks and Insider Participation..........................................................................................................................................................	~~185~~231
Compensation Committee Report......................................................................................................................................................................................................		~~185~~231

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER ~~MATTERS......................................~~ MATTERS......................................		~~185~~232

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR ~~INDEPENDENCE.........................................................................................~~ INDEPENDENCE.........................................................................................		~~185~~232
Director Independence.......................................................................................................................................................................................................................		~~185~~232
Related Party Transactions................................................................................................................................................................................................................		~~185~~232

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND ~~SERVICES......................................................................................................................................................................~~ SERVICES......................................................................................................................................................................		~~187~~234

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT ~~SCHEDULES.....................................................................................................................................................................~~ SCHEDULES.....................................................................................................................................................................		~~188~~235

ITEM 16. FORM 10-K SUMMARY.................................................................................................................................................................................................................		~~191~~238

~~SIGNATURES~~................................................................................................................................................................................................................................................ SIGNATURES................................................................................................................................................................................................................................................		~~192~~239


NERC
~~NERC~~	North American Electric Reliability Corporation
NES		Nashville Electric Service
NO₂x		Nitrogen ~~dioxide~~oxides
NO_x NPDES		~~Nitrogen oxides~~
~~NPDES~~	National Pollutant Discharge Elimination System
NRC		Nuclear Regulatory Commission
NSR		New Source Review
~~NYSE~~Nuclear Development		Nuclear Development, LLC
NWP		Nationwide Permit
NYSE		New York Stock Exchange
OCI		Other comprehensive income (loss)
OMB		Office of Management and Budget
PARRS		Putable Automatic Rate Reset Securities
PM		Particulate matter
QTE		Qualified technological equipment and software
~~RECs~~RCRA		Resource Conservation and Recovery Act
RECs		Renewable Energy Certificates
REIT		Real Estate Investment Trust
RSO		Renewable Standard Offer
SCCG		Southaven Combined Cycle Generation LLC
SCRs		Selective catalytic reduction systems
SEC		Securities and Exchange Commission
~~SERP~~SELC		Southern Environmental Law Center
SERP		Supplemental Executive Retirement Plan
SHLLC		Southaven Holdco LLC
~~SMR~~SIPs		State implementation plans
SMR		Small modular reactor(s)
SO₂		Sulfur dioxide
~~SOA~~SPC		Summer Place Complex
SOA		Society of Actuaries
SSSL		Seven States Southaven, LLC
~~TCWN~~TDEC		~~Tennessee Clean Water Network~~
~~TDEC~~	Tennessee Department of Environment & Conservation
TIPS		Treasury Inflation-Protected Securities
TVA Act		The Tennessee Valley Authority Act of 1933, as amended ~~16 U.S.C. §§ 831-831ee~~
~~TVARS~~TVA Board		TVA Board of Directors
TVARS		Tennessee Valley Authority Retirement System
U.S. Treasury		United States Department of the Treasury
USACE		U.S. Army Corps of Engineers
VIE		Variable interest entity
XBRL		eXtensible Business Reporting Language



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A



GLOSSARY OF COMMON ACRONYMS
Following are definitions of some of the terms or acronyms that may be used in this Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2021 (the "Annual Report"):

Term or Acronym		Definition
~~AOCI~~ACE		Affordable Clean Energy
ACPA		Anti-Cherrypicking Amendment
ANI		American Nuclear Insurers
AOCI		Accumulated other comprehensive income (loss)
ARO		Asset retirement obligation
ART		Asset Retirement Trust
~~BLEU~~Bonds		~~Blended low-enriched uranium~~
~~Bonds~~	Bonds, notes, or other evidences of indebtedness
CAA		Clean Air Act
CCR		Coal combustion residuals
CERCLA		Comprehensive Environmental Response, Compensation, and Liability Act
~~CME~~	~~Chicago Mercantile Exchange~~
CO₂		Carbon dioxide
~~COLA~~COVID-19		~~Cost-of-living adjustment~~Coronavirus Disease 2019
~~CSAPR~~COLA(s)		Cost-of-living adjustment(s)
CSAPR		Cross-State Air Pollution Rule
CTs		Combustion turbine unit(s)
CVA		Credit valuation adjustment
CY		Calendar year
~~DCP~~DBOT		Down-blend offering for Tritium
DCP		Deferred Compensation Plan
DER		Distributed Energy Resources
DOE		Department of Energy
EIS		Environmental Impact Statement
ELGs		Effluent Limitation Guidelines
~~EPA~~EMPs		Electromagnetic pulses
EO(s)		Executive Order(s)
EPA		Environmental Protection Agency
EPRI		Electric Power Research Institute
~~ESPA~~ERC		~~Early Site Permit Application~~Enterprise Risk Council
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FPA		Federal Power Act
FTP		Financial Trading Program
GAAP		Accounting principles generally accepted in the United States of America
GHG		Greenhouse gas
~~IRP~~HAP		Hazardous Air Pollutants
IRP		Integrated Resource Plan
~~JSCCG~~IwD		Inclusion with Diversity
JSCCG		John Sevier Combined Cycle Generation LLC
kWKOC		~~Kilowatts~~Knoxville Office Complex
~~kWh~~kW		~~Kilowatt hours~~Kilowatts
~~LPC~~kWh		Kilowatt hours
LPCs		Local power company customers
~~LTDCP~~LTA		Long-Term Agreement
LTDCP		Long-Term Deferred Compensation Plan
MATS		Mercury and Air Toxics Standards


MD&A						Management's Discussion and Analysis of Financial Condition and Results of Operations
MLGW						Memphis Light, Gas and Water Division
mmBtu						Million British thermal unit(s)
MtM						Mark-to-market
MW						Megawatts
NAAQS						National Ambient Air Quality Standards
NAV						Net asset value
NDT						Nuclear Decommissioning Trust
NEIL						Nuclear Electric Insurance Limited
NEPA						National Environmental Policy Act



Power Supply by Generating Source For the years ended September 30
Generation Resource⁽¹⁾	2019	2018	2017
Nuclear	39%	39%	38%
Natural gas and/or oil-fired	20%	20%	16%
Coal-fired	17%	19%	25%
Hydroelectric	10%	9%	7%
Purchased power (non-renewable)	9%	9%	9%
Purchased power (renewable)	5%	4%	5%



Corporate Measure	Weight	Actual			Threshold			Target			Stretch
TVA total spending ($ millions)	40%	$	4,467		$	4,862		$	4,725		$	4,589
Load not served (system minutes)	30%	3.7			4.8			4.0			3.6
Nuclear unit capability factor (UCF) (%)	15%	89.8		%	89.5		%	90.3		%	91.1		%
Combined cycle seasonal equivalent forced outage rate (%)	10%	7.5		%	3.3		%	2.0		%	1.5		%
Coal seasonal equivalent forced outage rate (%)	5%	12.7		%	13.6		%	12.1		%	10.8		%



	Degree Days
	2018⁽¹⁾	Normal⁽¹⁾	Percent Variation		2017⁽¹⁾	Normal⁽¹⁾	Percent Variation		2018⁽¹⁾	2017⁽¹⁾	Percent Change
Heating Degree Days	3,381	3,360	0.6	%	2,446	3,360	(27.2	)%	3,381	2,446	38.2	%

Cooling Degree Days	2,012	1,686	19.3	%	1,682	1,686	(0.2	)%	2,012	1,682	19.6	%

Total Degree Days	5,393	5,046	6.9	%	4,128	5,046	(18.2	)%	5,393	4,128	30.6	%



	2019			Variance 2019 vs 2018			2018				Variance 2018 vs 2017			2017
Base revenue
Energy revenue	5,128			(206		)	5,334			⁽¹⁾	448			4,886			⁽²⁾
Demand revenue	3,609			154			3,455				195			3,260
Grid access charge	257			257			—				—			—
Other charges and credits⁽³⁾	(638		)	22			(660		)		(13		)	(647		)
Total base revenue	8,356			227			8,129				630			7,499
Fuel cost recovery	2,799			(140		)	2,939				(142		)	3,081
Off-system sales	4			(3		)	7				1			6
Revenue from sales of electricity	11,159			84			11,075				489			10,586
Other revenue	159			1			158				5			153
Total operating revenues	$	11,318		$	85		$	11,233			$	494		$	10,739



Power Supply from TVA-Operated Generation Facilities and Purchased Power For the years ended September 30 (millions of kWh)
	2019			2018			2017
Coal-fired	27,934	17	%	31,471	19	%	39,019	25	%
Nuclear⁽¹⁾	63,433	39	%	64,194	39	%	58,742	38	%
Hydroelectric	16,058	10	%	13,736	9	%	10,967	7	%
Natural gas and/or oil-fired⁽²⁾	31,704	20	%	32,104	20	%	25,485	16	%
Total TVA-operated generation facilities⁽³⁾	139,129	86	%	141,505	87	%	134,213	86	%
Purchased power (non-renewable)⁽⁴⁾	14,105	9	%	14,183	9	%	13,586	9	%
Purchased power (renewable)⁽⁵⁾	7,840	5	%	7,245	4	%	7,127	5	%
Total purchased power	21,945	14	%	21,428	13	%	20,713	14	%
Total power supply	161,074	100	%	162,933	100	%	154,926	100	%


Interest Expense and Rates For the years ended September 30														Interest Expense and Rates For the years ended September 30
															2021			2020			Percent Change
Interest expense(1)														Interest expense(1)	$	1,088		$	1,142		(4.7)	%

Interest Expense and Rates⁽⁴⁾ For the years ended September 30
	2019			Percent Change		2018			Percent Change		2017
Interest expense⁽¹⁾	$	1,198		(3.6	)%	$	1,243		(7.7	)%	$	1,346

Average blended debt balance⁽²⁾	$	23,266		(6.3	)%	$	24,832		(1.8	)%	$	25,281		Average blended debt balance(2)	$	20,916		$	21,978		(4.8)	%

Average blended interest rate⁽³⁾	4.92		%	2.3	%	4.81		%	(5.9	)%	5.11		%	Average blended interest rate(3)	5.06		%	5.05		%	0.2	%


Short-Term Borrowing Table
	At September 30, 2021			For the year ended September 30, 2021			At September 30, 2020			For the year ended September 30, 2020
Gross Amount Outstanding (at End of Period) or Average Gross Amount Outstanding (During Period)
Discount notes	$	780		$	876		$	57		$	812
Maximum Month-End Gross Amount Outstanding (During Period)
Discount notes	N/A			$	1,598		N/A			$	1,875
Weighted Average Interest Rate
Discount notes	0.03		%	0.03		%	0.06		%	0.77		%



Short-Term Borrowing Table
	At September 30, 2019			For the year ended September 30, 2019			At September 30, 2018			For the year ended September 30, 2018			At September 30, 2017			For the year ended September 30, 2017
Gross Amount Outstanding (at End of Period) or Average Gross Amount Outstanding (During Period)
Discount notes	$	922		$	1,610		$	1,217		$	1,910		$	1,999		$	1,280
Weighted Average Interest Rate
Discount notes	2.152		%	2.320		%	2.045		%	1.500		%	1.000		%	0.668		%
Maximum Month-End Gross Amount Outstanding (During Period)
Discount notes	N/A			$	2,390		N/A			$	2,722		N/A			$	2,062


Capital Expenditures For the years ended September 30							Capital Expenditures For the years ended September 30
								Actual			Estimated Capital Expenditures(1)
Estimated Capital Expenditures⁽¹⁾ For the year ended September 30
	2020		2021		2022			2021			2022		2023		2024
Capacity expansion expenditures	$	353	$	750	$	1,064	Capacity expansion expenditures	$	588		$	1,322	$	1,102	$	845
Environmental expenditures	254		207		143		Environmental expenditures	126			134		75		11
Nuclear fuel	366		374		325		Nuclear fuel	445			298		284		334
Transmission expenditures	503		527		432		Transmission expenditures	473			516		458		498
Other capital expenditures⁽²⁾	886		875		939		Other capital expenditures(2)	933			919		933		868
Total capital expenditures	$	2,362	$	2,733	$	2,903	Total capital expenditures	$	2,565	(3)	$	3,189	$	2,852	$	2,556



Commitments and Contingencies Payments due in the year ending September 30
	2020		2021		2022		2023		2024		Thereafter		Total
Debt⁽¹⁾	$	1,952	$	1,860	$	1,028	$	29	$	1,022	$	15,476	$	21,367
Interest payments relating to debt⁽²⁾	1,058		1,017		966		945		944		14,254		19,184
Debt of VIEs⁽³⁾	40		41		43		40		36		937		1,137
Interest payments relating to debt of VIEs	52		50		49		47		45		451		694
Notes payable	23		—		—		—		—		—		23
Lease obligations
Capital⁽⁴⁾	53		53		53		55		51		418		683
Non-cancelable operating⁽⁵⁾	33		31		15		5		3		2		89
Purchase obligations
Power⁽⁶⁾	317		316		295		187		170		1,041		2,326
Fuel⁽⁷⁾	1,281		978		497		381		378		1,317		4,832
Other⁽⁸⁾	55		48		60		39		22		230		454
Environmental Agreements	1		2		2		2		1		4		12
Membership interests of VIEs subject to mandatory redemption	3		3		3		2		1		16		28
Interest payments related to membership interests of VIEs subject to mandatory redemption	2		2		2		1		1		7		15
Flood response commitment to NRC	—		27		—		—		—		—		27
Unfunded loan commitments	7		—		—		—		—		—		7
Long-term monitoring costs - Kingston ash spill	1		1		1		—		1		7		11
Payments on other financings⁽⁹⁾	60		217		36		10		10		223		556
Retirement Plan⁽¹⁰⁾	300		300		300		300		300		3,600		5,100
Total	$	5,238	$	4,946	$	3,350	$	2,043	$	2,985	$	37,983	$	56,545


Other Commitments and Contingencies Payments due for the years ending September 30
	2022		2023		2024		2025		2026		Thereafter		Total

Interest payments relating to debt(1)	$	958	$	936	$	935	$	906	$	852	$	12,250	$	16,837

Interest payments relating to debt of VIEs	49		47		45		44		42		363		590
Interest payments relating to membership interests of VIEs subject to mandatory redemption	2		1		1		1		1		5		11





Purchase obligations
Power(2)	313		224		237		196		177		1,222		2,369
Fuel(3)	1,525		759		506		402		242		1,060		4,494
Other(4)	171		90		44		28		52		201		586


Flood response commitment to NRC	27		—		—		—		—		—		27





Total	$	3,045	$	2,057	$	1,768	$	1,577	$	1,366	$	15,101	$	24,914


Sensitivity to Certain Changes in Pension Assumptions At September 30, 2021
Actuarial Assumption	Current Assumption		Change in Assumption		Impact
Effect on 2021 pension expense:
Discount rate	2.75	%	(0.25)	%	$	16
Expected return on assets	6.75	%	(0.25)	%	18
COLA	2.00	%	0.25	%	29

Effect on benefit obligation
Discount rate	2.90	%	(0.25)	%	396
COLA	2.00	%	0.25	%	258


Sensitivity to Changes in Assumed Health Care Cost Trend Rates At September 30, 2021
	1% Increase		1% Decrease
Effect on total of service and interest cost components for the year	$	4	$	(4)
Effect on end-of-year accumulated post-retirement benefit obligation	71		(69)


Short-term Borrowings At September 30
	2021			2020			2019
Gross amount outstanding - discount notes	$	780		$	57		$	922

Weighted average interest rate - discount notes	0.03		%	0.06		%	2.15		%


Debt Securities Activity For the years ended September 30	Debt Securities Activity For the years ended September 30						Debt Securities Activity For the years ended September 30
		2019		2018				2021		2020
Issues							Issues
2018 Series A⁽¹⁾		$	—	$	1,000

2020 Series A(1)							2020 Series A(1)	$	—	$	1,000
2021 Series A(2)							2021 Series A(2)	500		—
Discount on debt issues		—		(2		)	Discount on debt issues	—		(3)
Total		$	—	$	998		Total	$	500	$	997

Redemptions/Maturities⁽²⁾

Redemptions/Maturities(3)							Redemptions/Maturities(3)
electronotes®							electronotes®	$	—	$	219
2009 Series B							2009 Series B	29		28
2018 Series A							2018 Series A	—		1,000
1999 Series A PARRS (TVE)							1999 Series A PARRS (TVE)	—		23
1998 Series D PARRS (TVC)							1998 Series D PARRS (TVC)	—		17
1995 Series B							1995 Series B	—		140
2011 Series A							2011 Series A	1,500		—
1998 Series H							1998 Series H	331		—
Total redemptions/maturities of power bonds							Total redemptions/maturities of power bonds	1,860		1,427
Notes payable							Notes payable	—		23
Variable interest entities		$	38	$	36		Variable interest entities	41		39
Notes payable		46		53
electronotes^®		5		52
2013 Series A		1,000		—
2009 Series B		30		29
1997 Series E		—		650
2008 Series B		—		1,000
Total		$	1,119	$	1,820		Total	$	1,901	$	1,489


Short-Term Debt At September 30
CUSIP or Other Identifier	Maturity	Call/(Put) Date	Coupon Rate	2021		2020
Short-term debt, net of discounts				$	780	$	57
Current maturities of long-term debt of VIEs issued at par				43		41
Current maturities of notes payable				—		—
Current maturities of power bonds issued at par

880591EN8	8/15/2022		1.875%	1,000		—

880591EF5	12/15/2021		3.770%	1		1
880591EF5	6/15/2022		3.770%	27		28






880591EL2	2/15/2021		3.875%	—		1,500
880591DC3	6/7/2021		5.805%	—		258		(1)
Total current maturities of power bonds issued at par				1,028		1,787
Total current debt outstanding, net				$	1,851	$	1,885


Long-Term Debt At September 30	Long-Term Debt At September 30													Long-Term Debt At September 30
CUSIP or Other Identifier		Maturity	Coupon Rate		Effective Call Date	2019 Par				2018 Par			Stock Exchange Listings	CUSIP or Other Identifier	Maturity	Coupon Rate		Effective Call Date	2021 Par			2020 Par			Stock Exchange Listings
electronotes^®(2)		5/15/2020 - 2/15/2043	2.375% - 3.625%		2/15/2015 - 2/15/2018 ⁽⁵⁾	$	217			$	221		None
880591EV0		3/15/2020	2.250%			—				1,000			New York
880591EL2		2/15/2021	3.875%			1,500				1,500			New York
880591DC3		6/7/2021	5.805%	⁽³⁾		246			⁽¹⁾	261			New York, Luxembourg

880591EN8		8/15/2022	1.875%			1,000				1,000			New York	880591EN8	8/15/2022	1.875%			$	—		$	1,000		New York
880591ER9		9/15/2024	2.875%			1,000				1,000			New York	880591ER9	9/15/2024	2.875%			1,000			1,000			New York
880591EW8														880591EW8	5/15/2025	0.750%			1,000			1,000			New York
880591CJ9		11/1/2025	6.750%			1,350				1,350			New York, Hong Kong, Luxembourg, Singapore	880591CJ9	11/1/2025	6.750%			1,350			1,350			New York, Hong Kong, Luxembourg, Singapore
880591EU2		2/1/2027	2.875%			1,000				1,000			New York	880591EU2	2/1/2027	2.875%			1,000			1,000			New York
880591300⁽⁴⁾		6/1/2028	3.550%			273				273			New York
880591409⁽⁴⁾		5/1/2029	3.360%			232				232			New York
880591300(3)														880591300(3)	6/1/2028	2.134%			256			256			New York
880591409(3)														880591409(3)	5/1/2029	2.216%			208			208			New York
880591DM1		5/1/2030	7.125%			1,000				1,000			New York, Luxembourg	880591DM1	5/1/2030	7.125%			1,000			1,000			New York, Luxembourg
880591EX6														880591EX6	9/15/2031	1.500%			500			—			New York
880591DP4		6/7/2032	6.587%	⁽³⁾		307			⁽¹⁾	326			New York, Luxembourg	880591DP4	6/7/2032	6.587%	(2)		337		(1)	323		(1)	New York, Luxembourg
880591DV1		7/15/2033	4.700%			472				472			New York, Luxembourg	880591DV1	7/15/2033	4.700%			472			472			New York, Luxembourg
880591EF5		6/15/2034	3.770%			246				273			None	880591EF5	6/15/2034	3.770%			190			218			None
880591DX7		6/15/2035	4.650%			436				436			New York	880591DX7	6/15/2035	4.650%			436			436			New York
880591CK6		4/1/2036	5.980%			121				121			New York	880591CK6	4/1/2036	5.980%			121			121			New York
880591CS9		4/1/2036	5.880%			1,500				1,500			New York	880591CS9	4/1/2036	5.880%			1,500			1,500			New York
880591CP5		1/15/2038	6.150%			1,000				1,000			New York	880591CP5	1/15/2038	6.150%			1,000			1,000			New York
880591ED0		6/15/2038	5.500%			500				500			New York	880591ED0	6/15/2038	5.500%			500			500			New York
880591EH1		9/15/2039	5.250%			2,000				2,000			New York	880591EH1	9/15/2039	5.250%			2,000			2,000			New York
880591EP3		12/15/2042	3.500%			1,000				1,000			New York	880591EP3	12/15/2042	3.500%			1,000			1,000			New York
880591DU3		6/7/2043	4.962%	⁽³⁾		185			⁽¹⁾	195			New York, Luxembourg	880591DU3	6/7/2043	4.962%	(2)		202		(1)	194		(1)	New York, Luxembourg
880591CF7		7/15/2045	6.235%		7/15/2020	140				140			New York

880591EB4		1/15/2048	4.875%			500				500			New York, Luxembourg	880591EB4	1/15/2048	4.875%			500			500			New York, Luxembourg
880591DZ2		4/1/2056	5.375%			1,000				1,000			New York	880591DZ2	4/1/2056	5.375%			1,000			1,000			New York
880591EJ7		9/15/2060	4.625%			1,000				1,000			New York	880591EJ7	9/15/2060	4.625%			1,000			1,000			New York
880591ES7		9/15/2065	4.250%			1,000				1,000			New York	880591ES7	9/15/2065	4.250%			1,000			1,000			New York

Subtotal						19,225				20,300				Subtotal					17,572			18,078
Unamortized discounts, premiums, issue costs, and other						(131		)		(143		)		Unamortized discounts, premiums, issue costs, and other					(115)			(122)
Total long-term outstanding power bonds, net						19,094				20,157				Total long-term outstanding power bonds, net					17,457			17,956
Long-term debt of VIEs, net						1,089				1,127				Long-term debt of VIEs, net					1,006			1,048
Long-term notes payable						—				23

Total long-term debt, net						$	20,183			$	21,307			Total long-term debt, net					$	18,463		$	19,004


Summary of Long-Term Credit Facilities At September 30, 2021
Maturity Date	Facility Limit		Letters of Credit Outstanding		Cash Borrowings		Availability
September 2023	$	1,000	$	328	$	—	$	672
February 2024	150		38		—		112
February 2025	500		500		—		—
September 2026	1,000		301		—		699
Total	$	2,650	$	1,167	$	—	$	1,483


Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 1) Amount of Mark-to-Market Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) For the years ended September 30
Derivatives in Cash Flow Hedging Relationship	Objective of Hedge Transaction	Accounting for Derivative Hedging Instrument	2021		2020
Currency swaps	To protect against changes in cash flows caused by changes in foreign currency exchange rates (exchange rate risk)	Unrealized gains and losses are recorded in AOCI and reclassified to Interest expense to the extent they are offset by gains and losses on the hedged transaction	$	126	$	(1)


Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾ For the years ended September 30	Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾ For the years ended September 30									Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment Amount of Gain (Loss) Recognized in Income on Derivatives(1) For the years ended September 30

Derivative Type		Objective of Derivative	Accounting for Derivative Instrument	2019			2018			Derivative Type	Objective of Derivative(2)	Accounting for Derivative Instrument	2021		2020
Interest rate swaps		To fix short-term debt variable rate to a fixed rate (interest rate risk)	Mark-to-Market gains and losses are recorded as regulatory assets or liabilities Realized gains and losses are recognized in interest expense when incurred during the settlement period	$	(79	)	$	(89	)	Interest rate swaps	To fix short-term debt variable rate to a fixed rate (interest rate risk)	Mark-to-market gains and losses are recorded as regulatory assets or liabilities Realized gains and losses are recognized in Interest expense when incurred during the settlement period and are presented in operating cash flow	$	(115)	$	(97)

Commodity derivatives under FTP		To protect against fluctuations in market prices of purchased commodities (price risk)	Mark-to-Market gains and losses are recorded as regulatory assets or liabilities Realized gains and losses are recognized in fuel expense or purchased power expense when the related commodity is used in production	—			(8		)
Commodity contract derivatives										Commodity contract derivatives	To protect against fluctuations in market prices of purchased coal or natural gas (price risk)	Mark-to-market gains and losses are recorded as regulatory assets or liabilities Realized gains and losses due to contract settlements are recognized in Fuel expense as incurred	—		(1)



Fair Values of TVA Derivatives At September 30
	2019				2018
Derivatives That Receive Hedge Accounting Treatment:
	Balance			Balance Sheet Presentation	Balance			Balance Sheet Presentation
Currency swaps
£200 million Sterling	$	(90	)	Accounts payable and accrued liabilities $(6); Other long-term liabilities $(84)	$	(67	)	Accounts payable and accrued liabilities $(5); Other long-term liabilities $(62)
£250 million Sterling	(61		)	Accounts payable and accrued liabilities $(5); Other long-term liabilities $(56)	(12		)	Accounts payable and accrued liabilities $(5); Other long-term liabilities $(7)
£150 million Sterling	(57		)	Accounts payable and accrued liabilities $(4); Other long-term liabilities $(53)	(15		)	Accounts payable and accrued liabilities $(3); Other long-term liabilities $(12)

Derivatives That Do Not Receive Hedge Accounting Treatment:
	Balance			Balance Sheet Presentation	Balance			Balance Sheet Presentation
Interest rate swaps
$1.0 billion notional	$	(1,261	)	Accounts payable and accrued liabilities $(62); Other long-term liabilities $(1,199)	$	(878	)	Accounts payable and accrued liabilities $(56); Other long-term liabilities $(822)
$476 million notional	(498		)	Accounts payable and accrued liabilities $(24); Other long-term liabilities $(474)	(317		)	Accounts payable and accrued liabilities $(20); Other long-term liabilities $(297)
$42 million notional	(5		)	Accounts payable and accrued liabilities $(2); Other long-term liabilities $(3)	(4		)	Accounts payable and accrued liabilities $(1); Other long-term liabilities $(3)
Commodity contract derivatives	(41		)	Other current assets $12; Other long-term liabilities $(16); Accounts payable and accrued liabilities $(37)	60			Other current assets $41; Other long-term assets $31; Other long-term liabilities $(8); Accounts payable and accrued liabilities $(4)


Currency Swaps Outstanding
Effective Date of Currency Swap Contract	Associated TVA Bond Issues Currency Exposure	Expiration Date of Swap	Overall Effective Cost to TVA

2001	£250 million	2032	6.59%
2003	£150 million	2043	4.96%



Currency Swaps Outstanding At September 30, 2019
Effective Date of Currency Swap Contract	Associated TVA Bond Issues Currency Exposure	Expiration Date of Swap	Overall Effective Cost to TVA
1999	£200 million	2021	5.81%
2001	£250 million	2032	6.59%
2003	£150 million	2043	4.96%


Commodity Contract Derivatives At September 30
	2021				2020
	Number of Contracts	Notional Amount	Fair Value (MtM)		Number of Contracts	Notional Amount	Fair Value (MtM)

Natural gas contract derivatives	40	263 million mmBtu	$	247	42	302 million mmBtu	$	46



Financial Trading Program Realized Gains (Losses) For the years ended September 30
Decrease (increase) in fuel expense	2019		2018
Natural gas	$	—	$	(6	)



Decrease (increase) in purchased power expense
Natural gas	$	—	$	(2	)


Derivative Assets and Liabilities
Derivative Assets and Liabilities(1) (in millions)							Derivative Assets and Liabilities(1) (in millions)
	At September 30, 2019
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Balance Sheet⁽¹⁾		Net Amounts of Assets/Liabilities Presented in the Balance Sheet⁽²⁾			At September 30, 2021		At September 30, 2020
Assets							Assets

Commodity derivatives not subject to master netting or similar arrangement	$	12	$	—	$	12	Commodity derivatives not subject to master netting or similar arrangement	$	250	$	49


Liabilities							Liabilities
Currency swaps⁽³⁾	$	208	$	—	$	208
Interest rate swaps⁽³⁾	1,764		—		1,764
Currency swaps(2)							Currency swaps(2)	$	83	$	209
Interest rate swaps(2)							Interest rate swaps(2)	1,639		2,041
Total derivatives subject to master netting or similar arrangement	1,972		—		1,972		Total derivatives subject to master netting or similar arrangement	1,722		2,250
Commodity derivatives not subject to master netting or similar arrangement	53		—		53		Commodity derivatives not subject to master netting or similar arrangement	3		3
Total liabilities	$	2,025	$	—	$	2,025	Total liabilities	$	1,725	$	2,253

	At September 30, 2018
	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Balance Sheet⁽¹⁾		Net Amounts of Assets/Liabilities Presented in the Balance Sheet⁽²⁾
Assets
Commodity derivatives not subject to master netting or similar arrangement	$	72	$	—	$	72

Liabilities
Currency swaps⁽³⁾	$	94	$	—	$	94
Interest rate swaps⁽³⁾	1,199		—		1,199
Total derivatives subject to master netting or similar arrangement	1,293		—		1,293
Commodity derivatives not subject to master netting or similar arrangement	12		—		12
Total liabilities	$	1,305	$	—	$	1,305