TVE 10-K & 10-Q changes, risk factors and insider trading

TVA may become subject to additionalnew environmental regulationslaws, regulations, or orders or may be required to expend significant funds in the future to comply with current regulations.laws, regulations, or orders.

Complicating these matters further, over the last several decades, U.S. Administrations have increasingly relied on regulations and executive orders to implement environmental policies and objectives in the absence of Congressional agreement regarding new legislation.objectives. This condition, which creates instability and unpredictability ofwith respect to the applicable environmental regulations,law, seems likely to persist and could increase due to apparent polarization between the two main political parties.increase. As a result, TVA often must comply with and otherwise modify its power supply plans or incur significant costs to adapt to environmental regulations without assurance of their continued effect. TVA often does not have the ability to anticipate, or prepare in advance for, changes in regulatory or policy approaches that may be implemented following a change in Administration.

•A divestment or forced sale of TVA assets, which could trigger change of control provisions in certainsome material contracts, in addition to other costs and potential business disruptionsdisruptions, as well as the potential privatization of TVA;

•A restriction on TVA accessingaccessing, controlling, or controllingdisbursing its funds that are on deposit in its U.S. Treasury account;

•A lowering of TVA’s debt ceiling from the $30.0 billion outstanding provided for in the TVA Act, which could inhibit TVA’s ability to raise capital necessary for essential business functions or for investing in carbon free technologies;

•A restriction on TVA’s authority to manage the Tennessee River system with power system operations, which could negatively impact TVA’s operations of certainsome electric generation facilities; and

•A limitation on TVA’s ability to pay its Chief Executive Officer ("CEO"), key officers, or other employees competitive wages, which could negatively impact TVA’s ability to hire and retain talent needed to effectively fulfill TVA’s mission.

TVA's governmental status may interfere with its ability to quickly respond to the needs of its current or potentialprospective customers or to act solely in the interest of its ratepayers.ratepayers and may impose additional obligations on TVA.

As a governmental entity, TVA has certain legal requirementsobligations that prevent it from responding as quickly to potential changes in the market or requests from current or potentialprospective 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"),NEPA, which requires environmental reviews to be completed before TVA decides to pursue certain projects. The delay in responding to requests could damage relationships with current customers, limit TVA's ability to take action to execute on its plans quickly, deter potential customers from moving into TVA's service territory, or damage TVA's reputation.

TVA is involved in a wide range of legal and administrative proceedings and is likely to become involved in future additional proceedings in the ordinary course of business or as a result of, among other things, catastrophic events or environmental conditions arising from TVA property or areas where TVA has disposed of materials or property. For a discussion of certain current material legal proceedings, see Note 2223 — Commitments and Contingencies — Legal Proceedings. The additional proceedings could involve, among other things, challenges to TVA’s CCR facilities, challenges to TVA's natural gas-fired plants and related pipelines, suits asserting nuisance claims under state law related to coal-fired plants, challenges to the anti-cherrypicking provision, challenges under NEPA, challenges under the Freedom of Information Act, tort actions arising from accidents on TVA's property, challenges to TVA's immunity to certain actions, 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 substantial amounts. Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, incur additional capital or operational expense,costs, change how it operates its fossil-fueled units, cease construction of new natural gas-fired plants, reduce emissions to a greater extent or at a faster pace than TVA had planned, closecomply existingwith new or additional requirements related to CCR facilities sooner than planned, close existing CCR facilities using a different methodology than planned, build new CCR facilities sooner than planned, build new CCR facilities that were not planned,management, cease operation of some coal-fired units, adjust its rates, or terminate or modify contracts. These events individually or in the aggregate could have a material adverse effect on TVA’s cash flows, results of operations, and financial condition.

TVA’s service area is defined primarily by provisions of law and long-term contracts. The fence limits the region in which TVA or LPCs that 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. From time to time, there have been efforts to circumvent the protection of the anti-cherrypicking provision. In addition, the protections afforded by the anti-cherrypicking provision conceivably could be affected by future federal legislation. If FERC were to limit the application of the anti-cherrypicking provisionprovision, or if federal legislation were to eliminate or limit theits application of the anti-cherrypicking provisionapplication, without corresponding legislative modifications to the territorial limitations imposed by the fence, TVA could face increased competition and may lose some of its customers.

TVA is subject to federal reliability standards 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. If TVA fails to comply with the mandatory reliability standards, TVA could be subject to increased compliance obligations, sanctions for failure to comply with NERC requirements, or both. Complying with these or additionalNERC 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 operates coal-fired units that produce CCR as byproducts of the power production process. TVA manages its CCR in dedicated, protective facilities operated by TVA. TVA has closed some of these facilities and is in the process of closing others. Many of these facilities do not have liners, as they were constructed prior to the requirement that such facilities be built with liners. TVA has been ordered by TDEC to undertake investigations at all CCR facilities in Tennessee. TVA haswas also beenpreviously involved in litigation related to certainsome of its CCR facilities, and to resolve one such lawsuit, TVA agreed to remove or beneficially reuse significant amounts of CCR material at Gallatin Fossil Plant ("Gallatin").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 that were not required to be closed by the CCR Rule or relocate CCR material to lined facilities. Further, TVA has decided to move all CCR material at Allen Fossil Plant rather than closing the CCR facilities in place as originally planned, which subjects TVA to additional costs and transportation-related risks. Moreover, EPA's newrevised CCR rule will likelymay require TVA to incur significant additional costs with implementing closure, and EPA has recently interpreted its CCR rule in a way that could challenge TVA's predominant closure methodology for many units, thereby potentially creating significant additional costs with implementing closure. The ultimate resolution of matters relating to CCR obligations could have a material adverse effect on TVA's cash flows, results of operation, and financial condition.

TVA relies on certain assumptions about the future that may prove inaccurate, including when determining the appropriate mix of generation assets.assets and when and to what extent to update its transmission system.

To develop long-term plans, TVA uses certain assumptionsplanning thatmodels, are presently justifiable to develop its future plans. Such assumptions includeincluding economic forecasts, anticipated energy and commodity prices, cost estimates, construction schedules, power demand forecasts, potential regulatorylegal environments, and thegeneration-mix appropriatemodeling. generationFor mix to meet demand. Should these assumptions be inaccurate, or be superseded by subsequent events, TVA's plans may not be effectiveexample, in achieving the intended results. In determining TVA’s power generation assets should consist of a mix of nuclear, coal-fired, natural gas-fired, and renewable power sources, including hydroelectric, TVA considered various factors, including the anticipated availability of its nuclear units, the availability of non-nuclear facilities, the forecasted cost of natural gas and coal, the forecasted demand for electricity, its carbon reduction aspirations, and environmental compliance requirements, including the expense of adding air pollution controls to its coal-fired units. If any of these assumptions prove to be materially changeinaccurate or are impacted by subsequent events, TVA's generation mix may not address its operational needs in the most efficient and cost-effective manner. Additionally, reallocating the mix of power generation assets from the planned mix may result in additional capital and operational expense. Furthermore, achieving TVA's carbon reduction aspirations may require TVA to make significant capital investments, including investments in new technologies, and take a long time. TVA may retire coal-fired and natural-gas fired generation facilities sooner than planned to meet carbon reduction aspirations, which also may require significant capital expenditures or additional power purchases, potentially causing an adverse effect on TVA's cash flows, results of operations, and financial condition, as well as TVA's ability to meet electricity demand.

TVA’s business requires substantial expenditures for capital improvements, including construction of new generation, transmission, and distribution facilities. Existing TVA facilities also require substantial ongoing expenditures, including those necessary to maintain or improve reliability and meet environmental goals and standards. TVA intends to continue expanding, developing, and improving its electric transmission and distribution systems while also undertaking projects to maintain and improve the reliability of existing TVA facilities and comply with evolving environmental laws and regulations. Among other projects, TVA is building new natural gas-fired generation facilities, seeking to improve the reliability and resiliency of its transmission system, undertaking repairs at certain hydroelectric facilities and dams, and closing someCCR coal-fired plants and their supporting infrastructure.facilities. These activities involve risks of overruns in the cost of labor and materials, as well as potential delays, in beginning or completing these repairs, closures, or other projects. FurtherFurther, cancellation or delay of projects related to these activities may adversely affect TVA's cash flows, financial condition, and results of operations. SuchCost cancellationincreases, cancellation, or delays may result from, among other things, changes in market conditions,conditions; changes in laws or regulations,regulations that, among other things, may make it more expensive or difficult for TVA to build or operate natural gas-fired plants; unanticipatedly high environmental remediation costs,costs; lack of productivity,productivity; human error,error; supply chain challenges,challenges; regional health emergencies,emergencies; the failure to schedule activities properly, TVA'sproperly; inability to obtain the necessary regulatory approvalsapprovals, permits, or licenses, TVA'sincluding decisionapproval tofrom cancelfederal and state regulators for construction and operation of anew facilitynatural gas assets and attendant infrastructure (e.g., pipelines or canceltransmission anotherfacilities); typestakeholder opposition; insolvency of project,TVA's includingsuppliers dueor toother delays, cost overruns,counterparties; changes in customer preferences, orpreferences; changes in requirements applicable to how TVA conducts construction, repair, or closure activities.activities; and legal challenges which, among other things, may come in the form of direct legal challenges to TVA projects or through challenges to TVA's environmental reviews or the attempts of TVA or third parties to obtain necessary licenses and permits. 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.

Hazard Risks. Hazards 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.property and TVA's reputation. Although TVA carries certainsome types of nuclear insurance, the amount that TVA is required to pay in connection with a nuclear incident in the United States could significantly exceed the amount of coverage provided by insurance. The licensee of each U.S. 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 $166 million per reactor, per incident. With TVA's seven reactors, the maximum total contingent obligation per incident is $1.2 billion. This retrospective premium is payable at a maximum rate currently set at approximately $25 million per year, per incident, per reactor. In addition, following an incident TVA may have to pay retrospective insurance premiums, and may experience a reduction in the availability of nuclear insurance, an increase in the cost of nuclear insurance, an increase in the costs of operating nuclear units, or increased regulation or restrictions on the construction, operation, and decommissioning of nuclear facilities. Moreover, federal legislation could impose revenue-raising measures on the U.S. 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.

Availability of Components. Nuclear facilities require specialized components and access to intellectual property for operation. As the number of reliable suppliers of such components decreases and access to intellectual property is reduced, the availability of the components and access to the intellectual property also will likely decrease. If TVA were 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, which may result in substantial expense. Further, limitations on global trade resulting from futurepandemics, andtrade pastwars, pandemicstariffs, andsanctions, globalmilitary conflicts, or other limitations on global shipping, such as international trade restrictions or sanctions,commerce could materially decrease the availability or increase the cost of necessary or desired equipment.

If operating issues were to develop with TVA nuclear power units that were not correctable, TVA may choose to shut down one or more units or be ordered to do so by the NRC. Returning the unit(s) to operation could be a lengthy and expensive process, or might not be feasible depending on circumstances. In either case, TVA's cash flows, results of operations, financial condition, and reputation may be negatively affected. The inability to operate all of TVA's nuclear units may cause TVA to rely more on forms of generation that produce more carbon, thus makingmake it more difficult for TVA to meet its carbon reduction aspirations or meet reliability goals.

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 for commerce along the Tennessee River system. TVA also operates flood control dams and supporting infrastructure. Because of TVA's status as a governmentgovernmental corporationentity and TVA's role as the primary power provider for its service territory, individuals, groups, or nation states may target TVA with physical attacks or threats of such attacks. Events such as war, armed conflicts, terrorist attacks, or similar disruptive events may increase the risks of these attacks targeting critical physical infrastructure in the U.S.

Although TVA's operations are protected by automated monitoring systems, TVA Police and Emergency Management, TVA employees, local law enforcement, or a combination thereof, it may not be possible to effectively deter or prevent such attacks. These attacks could pose health and safety risks, significantly disable or destroy TVA assets, interfere with TVA's operations, result in additional regulatory or security requirements or litigation, increase the costs of nuclear licensing or compliance, and otherwise negatively affect TVA's reputation, cash flows, results of operations, and financial condition. In addition, following a physical attack or threat, TVA may incur increased costs for added security measures, including additional physical plant security and security personnel, increased capability, or other necessary measures.measures and potentially be responsible for resulting damages to others.

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. As such, they require regular maintenance, repair, and replacement in order to continue uninterrupted operation. Additionally, certainsome of TVA's newer assets utilize advanced technology that 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 were to fail to operate as planned, if necessary repairs or upgrades wereare delayed or could notcannot be completed as quickly as anticipated, or if necessary spare parts wereare unavailable, TVA:

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

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. The aging of TVA's physical infrastructures and systems may increase the risk and consequences of accidents, especially if not properly maintained.

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. CertainSome of TVA's generation and transmission assets are critical to maintaining reliability of the transmission system. Additionally, TVA uses assets that belong to third parties to transmit power and maintain reliability. Accordingly, problems at other utilities as well as at TVA's facilities, including disruptions or black-outs caused by an event such as a severe storm, wildfires, a generator or transmission facility outage on a neighboring system, or the actions of a neighboring utility, may cause interruptions in TVA's service to its customers, increase congestion on the transmission grid, or reduce service reliability. The increasing installation of intermittent sources of power, such as wind and solar, as well as the retirement of dispatchable generation resources, such as coal-fired plants, may place additional strain on TVA's and neighboring systems, and additional transmission upgrades may be required to maintain reliability. Upgrades may include enhancements to existing lines and substations or new installations as necessary to provide adequate power transmission capacity, maintain voltage support, and ensure generating plant and transmission system stability.

TVA purchases coal, uranium, natural gas, fuel oil, and electricity from a number of suppliers. 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 certainsome of its 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.limitations. TVA's reliance on purchased power may increase if the demand for power increases in TVA's service territory, and purchased power may become more costly, or perhaps be unavailable, if the demand for power also increases in surrounding service territories. Examples of circumstances that may disrupt, or materially increase the cost of, the future delivery of fuel, purchased power, contracted services, or other critical supplies include but are not limited to cyber attacks; war or physical attacks, including the wars in Ukraine and Israelattacks; political developments, international trade restrictions or tariffs, or legal actions; mine closures or reduced mine production; increase in demand for power by other power systems which reduces the amount of power that is available for purchase by TVA; increases in fuel exports; environmental regulations affecting TVA's suppliers; transportation or delivery constraints; the failure of suppliers to timely deliver the services or supplies to TVA at budgeted costs due to force majeure events, forced outages not caused by force majeure events, or opportunistic non-performance or intentional defaults by suppliers; shortages of raw materials; supply chain difficulties; increased cost of components and labor; strikes or work stoppages; inflation; availability of personnel being impacted by regional health emergencies; or similar events.

If one of TVA's suppliers were to fail 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.price. TVA may not be able to recover this difference from the original supplier. In addition, any disruption of TVA's supplies could require TVA to operate higher cost generation assets, thereby negatively affecting TVA's cash flows, results of operations, and financial condition. Moreover, if TVA were unable to acquire enough replacement fuel, power, or supplies, or were to have insufficient reserves to offset the loss, TVA may not be able to operate certain assets in the manner TVA determines is in its best interests or provide enough power to meet demand or provide power on a basis TVA considers most reliable. As a result, power curtailments, brownouts, or even blackouts could occur.occur that could negatively impact TVA's reputation.

Global conflicts and terrorism, such as those in Ukraine and Israel, as well as any retaliatory military action by the United States and its allies, may have an adverse effect on TVA through increased political, economic, and financial market instability and volatility in the prices for natural gas and oil. Future acts of terrorism could be directed against companies operating in fuel and energy transportation and distribution, which may adversely affect the operation of TVA’s ability to do business. TVA may experience increased costs to implement increasedenhanced security,security measures, including additional plant security and security personnel. This situation could extend not only to fuel and minor components but could materially increase costs or decrease availability of large components needed for TVA’s capital projects.

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 becomegrow accessiblein vianumber theand internet.can be attacked remotely. TVA hasis beenregularly targeted byin cyber attacks in the past and anticipates that it will be consistently targeted in the future. These attacks may have been carried out, or in the future could be carried out,out by individuals, groups, or even nation states. TVA employs extensive cyber safeguards and works with industry specialists and relevant governmental authorities to deter, stop, or mitigate cyber attacks. Despite implementation of these security measures, TVA's facilities and information infrastructure may be subject to or vulnerable to disability, failures, or unauthorized access. Furthermore, as technology becomes more prevalent in energy infrastructure, TVA's infrastructure may be subject to increased cyber vulnerability in the future. Cyber attacks could come through one or more of a number of means, such as computer viruses, malicious or destructive code, phishing attacks, denial of service attacks, or ransomware. Cyber attacks may result in security breaches that may be detrimental to TVA's operations, including third parties' improperly accessing TVA's system and demanding ransom based on threats to expose sensitive data, including data from employees, customers, and financial parties, to gain operational control, or to expose security vulnerabilities specific to TVA’s facilities. 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 to TVA personnel and the customers and communities that TVA serves.

Because the investigation of any cybersecurity breach is inherently unpredictable and would require substantial time to complete, TVA may not be able to quickly remediate the consequences of any breach, which may increase the costs and enhance the negative consequences associated with a breach. Additionally, the theft, damage, or improper disclosure of sensitive data may subject TVA to penalties and claims from third parties or increased governmental oversight. These claims could negatively affect TVA's cash flows, results of operations, financial condition, and reputation.

ManyTVA relies on many third parties on which TVA relies for services, including for transferring funds to non-TVA entities or receiving delivery of products in the ordinary course of business, that are heavily computerized and use assets such as information technology and networking systems. These providers' systems are susceptible to cybersecurity and data breaches and outages from fire, floods, power loss, telecommunications failures, physical attack, and similar events. If any of these third parties were to experience interference from cyber attacks or significant system failures or outages, which events have occurred in the past and may occur again in the future, 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 cash flows, results of operations, 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 Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Safeguarding Assets — Cybersecurity for a discussion of recent cyber attacks on third parties.

TVA’s sensitive information may be subject to improper disclosure or harmful fabrication by artificial intelligence (“AI”) and machine learning technologies on systems external to TVA, leading to compromises in cybersecurity. AI and machine learning technology may also be flawed, and data sets used in generative AI may be insufficient or contain biased, incorrect, or incomplete information. Additionally, inconsistent application of AI regulations and guidance in the industry may make the intellectual property ownership and license rights to certain information unclear. TVA could suffer reputational damage or face operational challenges because of any inconsistencies or flaws in the application of AI or machine learning technology.technology or from the improper use of AI by employees or contractors. TVA could also face costs in complying with any new regulations concerning AI. The cost of implementing new AI regulations or the consequences of not complying with any future regulations could harm TVA’s financial condition. Moreover, AI may be used to enhance malicious cyber attacks.

TVA’s current asset strategy and capital financing approach and plans are based on assumptions drawn from recent trends suggesting increased demand for TVA electricity over the next several decades. This demand has arisen from, and seems likely to continue to arise from, among other things, increasing population in TVA’s service territory, utilization of AI that uses significantly more power than traditional data processing, cryptocurrency mining, greater usage and adoption of electric vehicles, and economic development, including new or expanded data centers. Some factors that could unexpectedly lead to lower demand than TVA has planned for include one or more of the following: extended or severe economic downturns or recessions, loss of customer demand due to higher-than-expected adoption of TVA flexibility options that allow customers to produce a certain percent of their own power needs, unexpectedly high utilization of DER, increased energy efficiency and conservation, and loss of customers, including through loss of TVA’s restricted service territory. Because TVA is investing heavily in developing its energy portfolio to meet increasing loads, lower-than-anticipated demand could leadresult toin stranded costs as well as a reduction in planned revenue streams, which may constrain TVA’s cash flows, financial condition and results of operations.

If future demand were to be higher than TVA can address through execution of its current asset strategy, TVA may have to purchase additional generation or capacity at rates muchcosts higher than what it costs TVA canto produce electricity itself. The higher that demand is at such time nationally, the more expensive such additional generation or capacity is likely to be. In addition, if capacity were not available elsewhere, TVA may have to take emergency measures to curtail load, including requiring rolling blackouts.blackouts that could negatively impact TVA's financial results and reputation. On the programmatic side, TVA may be forced to raise rates or waitlistdelay prospectiveserving new industrial or commercial customers. These outcomes would likely have a material adverse effect on TVA’s financial condition and results of operations, including through negative impacts to TVA’s reputation.

On September 30, 2024,2025, TVA's qualified pension plan had assets of approximately $8.7$8.6 billion compared to liabilities of approximately $11.0$10.3 billion. The plan is mature with approximately 21,00022,000 retirees and beneficiaries receiving benefits of approximately $750$800 million per year. The costs of providing benefits depend upon a number of factors, including, but not limited to,including 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.

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

•Energy — Delivering reliable,reliable and low cost, cleancost energy;

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;conditions, tougherchanging environmental standards; and the need to diversify its power supply and adapt to changing customer usage behaviors,standards, new technologies, and emerging, non-traditional competition. ToTVA continueis focused on unleashing American energy, while working together with partners to delivermeet itselectricity missionneeds, ofprotect serviceresources, whileand evolvinggrow forthe futureregion's success, TVA must realize five strategic priorities, which are comprised of several strategic elements each:economy.

TVA's mission sets the stage for its strategic planning process that includes strategic objectives,priorities, strategic elements, initiatives, and scorecards for performance designed to provide clear direction for improving TVA's core business. TVA's five strategic priorities are below. TVA's strategic priorities may be revisited for future years once a Board quorum is restored.

TVA's operating revenues were $12.3$13.7 billion and $12.1$12.3 billion for the years ended September 30, 20242025 and 2023,2024, respectively. Operating revenues increased for the year ended September 30, 20242025 as compared to the prior year, primarily as a result of higher effective fuel rates, higher effective base rates, and increased sales volume. Higher effective fuel rates andwere due primarily to using higher salescost volume,coal partiallyand offsetnatural bygas lowergeneration fueldue rates.to less availability of nuclear generation as compared to the same period of the prior year. Effective base rates were higher primarily due to the TVA Board of Directors' ("TVA Board") action to approve a 4.55.25 percent wholesale base rate increase beginningeffective inOctober 20241, and the pandemic credits ending on September 30, 2023.2024. The higherincreased sales volume was primarily driven by ahigher 20sales percentto increaseresidential inand coolingsmall degreecommercial daysand industrial customers as comparedwell toas increases within the samedata periodprocessing, of the prior year. Lower fuel rates were primarily due to lower coal, natural gas,hosting, and purchasedrelated powerservices prices.sector.

Total operating expenses decreasedincreased $274$1.0 millionbillion for the year ended September 30, 2024,2025, as compared to the prior year, primarily due to aan decreaseincrease in fuel and purchased power expense. Fuel and purchased power expense decreasedincreased $432$732 million for the year ended September 30, 2024,2025, as compared to the same period of the prior year, primarily due to lowerhigher coal,demand natural gas, andfor purchased power as a result of less availability of nuclear generation, higher effective fuel rates, and higher purchased power market prices. Depreciation and amortization expense decreasedincreased $75$133 million forprimarily as a result of increases in the yearamortization endedexpense Septemberof 30,decommissioning 2024,costs asrecovered comparedin rates and amortization expense of finance leases, the decision to theretire prior year, primarily driven by a decrease in depreciation expense associated with the retirement of Bull RunKingston Fossil Plant ("Bull RunKingston")., Theseand decreasesadditions wereto partiallynet offsetcompleted byplant. In addition, there was a $269$76 million increase in Operating and maintenance expense primarily due to increases in payroll and benefit costs duerelated to severance costs associated with Enterprise Transformation Program ("ETP") efforts, labor escalation for cost of living increasesincreases, and additionalhigher headcountmedical toclaims, supportpartially operational needs, outage expense drivenoffset by ana increasedecrease in nuclear outage days, and contract labor costsexpense primarily relateddue to strategicfewer projectnuclear workrefueling and power operations performance improvement activities.outages.

TVA's economic development efforts and programs continued to help attract or expand businesses and industries in the Tennessee Valley. These companies announced projected capital investments of $8.9over $6.6 billion and are expected to create 10,3689,316 jobs and retain 42,39343,254 jobs. These amounts are forward-looking and are subject to various uncertainties. Amounts may differ materially based upon a number of factors, including, but not limited to, economic downturns or recessions. See Forward-Looking Information and Part I, Item 1A, Risk Factors for a discussion of additional factors, and see Part I, Item 1, Business — Economic Development Activities for definitions of "new jobs" and "retained jobs."

Sales of electricity, which accounted for nearly all of TVA's operating revenues,electricity were 162,933167,612 million and 157,311162,933 million kilowatt hours ("kWh") for 20242025 and 2023,2024, respectively. TotalThe total sales of electricity in 2025 included 99 thousand kWh of pre-commercial generation at Johnsonville Aeroderivative CT Units 21-30. The total sales of electricity in 2024 includesincluded 137 millionthousand kWh of pre-commercial generation at Paradise CTs 5-7, all of which was recognized in the three months ended December 31, 2023. Total sales of electricity in 2023 includes 99 million kWh of pre-commercial generation at Colbert CT Units 9-11.5-7. TVA sells power at wholesale rates to LPCs 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 TVA's system needs is sold under exchange power arrangements with certain other power systems.

Information included in the charts above was derived from energy usage of directly served customers and customers served by LPCs during calendar year ("CY") 2023,2024, and these graphs will continue to be updated on a CY basis.

Sales of electricity increased approximately fourthree percent for the year ended September 30, 2024,2025, as compared to the same period of the prior year. The increased sales volume for LPCs was primarily driven by an increase in cooling degree days of 20 percent. For industries directly served,higher sales ofto electricityresidential increasedand primarilysmall commercial and industrial customers as well as increases within the data processing, hosting, and related services sector due to business-specific factors.sector.

(1) Represents revenue capitalized during pre-commercial operations at Johnsonville Aeroderivative CT Units 21-30 in 2025 and Paradise CTsCT Units 5-7 in 2024 and Colbert CTs 9-11 in 2023.2024.

(32) Represents revenue capitalized during pre-commercial operations at Johnsonville Aeroderivative CT Units 21-30 in 2025 and Paradise CTsCT Units 5-7 in 2024 and Colbert CTs 9-11 in 2023.2024.

Operating revenues increased $260$1.4 millionbillion for the year ended September 30, 2024,2025, as compared to the prior year, primarily due to a $862$690 million increase in base revenue. The $862$690 million increase in base revenue was driven by a $637$400 million increase attributable to higher effective base rates and a $225$290 million increase attributable to higher sales volume. The increase in effective base rates was primarily due to the TVA Board action to approve a 4.55.25 percent wholesale base rate increase beginningeffective inOctober 20241, and the pandemic credits ending on September 30, 2023.2024. The higher sales volume was driven primarily dueby higher sales to anresidential increaseand insmall coolingcommercial degreeand daysindustrial ofcustomers 20as percent.well Partiallyas offsettingincreases within the increasedata inprocessing, basehosting, revenueand related services sector. In addition, there was a $627$670 million decrease in fuel cost recovery revenue. The $627 million decreaseincrease in fuel cost recovery revenue was driven by a $774$572 million decreaseincrease attributable to lowerhigher effective fuel rates partially offset byand a $147$98 million increase attributable to higher sales volume. The lowerhigher effective fuel rates were due primarily to using higher cost coal and natural gas generation due to lowerless coal,availability naturalof gas,nuclear andgeneration purchasedas powercompared prices.to the prior year.

(1) Excludes effects of the fuel cost adjustment in the amounts of $(4)$18 million and $42$(4) million for the years ended September 30, 20242025 and 2023,2024, respectively.

Fuel expense decreasedincreased $380$207 million for the year ended September 30, 2024,2025, as compared to the prior year. ThisAn decreaseincrease of $194 million was due primarily due to a decrease inhigher effective fuel rates duerelated to lowerusing higher cost coal and natural gas prices,generation resultingdue into aless $373availability millionof decreasenuclear ingeneration fuelas expense.compared to the prior year. Additionally, fuel expense decreasedincreased $46$22 million due to the deferralrecovery of prior year deferrals of unplanned coal costscosts, and gas prices being lower than forecasted during the summer of 2024 and the recovery of unplanned fuel costs in the prior year that were deferred in the summer of 2022.2025. Partially offsetting these decreasesincreases was ana increasedecrease of $39$9 million in fuel expense due to highermore demandavailability forof energy.hydro generation as compared to the prior year.

Purchased power expense decreasedincreased $52$525 million for the year ended September 30, 2024,2025, as compared to the prior year. This decreaseincrease was primarily due to lowerhigher purchaseddemand powerfor marketenergy pricesand comparedless to the same periodavailability of theTVA priornuclear year,generation, resulting in aan decreaseincrease of $259$305 million. Additionally, purchased power expense decreasedincreased $43$173 million due to higher purchased power market prices as compared to the prior year. Finally, purchased power expense increased $47 million due to the deferralrecovery of prior year deferrals of unplanned purchased power costs from less availability of nuclearcosts, and hydro generationgas and the recovery of unplanned purchased power costsprices inbeing thelower priorthan yearforecasted that were deferred induring the summer of 2022. Partially offsetting these decreases was an increase of $250 million in purchased power expense due to higher demand for energy, and to a lesser extent, less availability of nuclear and hydro generation.2025.

Operating and maintenance expense increased $269$76 million for the year ended September 30, 2024,2025, as compared to the prior year. This increase was primarily due to $126$136 million of increased payroll and benefit costs primarily due to labor escalation for cost of living increasesincreases, severance costs associated with ETP efforts, and additionalhigher headcountmedical toclaims. supportPartially operationaloffsetting needs,these increases was a $39$48 million increasedecrease in outage expense primarily due to an increase infewer nuclear outagerefueling days, and $30 million of increased contract labor costs primarily related to strategic project work and power operations performance improvement activities. In addition, there was a $12 million increase in materials and supplies related to power operations performance improvement activities and other natural gas project work and a $9 million increase in expenditures related to TVA's New Nuclear Program.outages.

Depreciation and amortization expense decreasedincreased $75$133 million for the year ended September 30, 2024,2025, as compared to the prior year. The decreaseincrease was primarily driven by aan decreaseincrease of $43 million related to amortization expense of decommissioning costs recovered in rates and amortization expense of finance leases and an increase in depreciation expense of $206$18 million related to the decision to retire Bull Run, as Bull Run became fully depreciated in theApril fourth quarter of 2023. Partially offsetting this decrease was a $44 million increase in depreciation primarily related to TVA's decision2024 to retire CumberlandKingston. andAdditionally, Kingston, a $38 million increase in amortization expense from amortization of finance leases and retirement of regulatory assets, and a $19 million increase due to Colbert CTs 9-11 and Paradise CTs 5-7 being placed into service in the fourth quarter of 2023 and the first quarter of 2024, respectively. The remainder of the partially offsetting increasethere was primarilyan increase due to depreciation of other additions to net completed plant. See Note 1 — Summary of Significant Accounting Policies — Property, Plant, and Equipment, and Depreciation — Depreciation.

Tax equivalents expense decreasedincreased $36$76 million for the year ended September 30, 2024,2025, as compared to the prior year. This change was primarily driven by aan decreaseincrease in TVA's revenue from sales of electricity in 2024, which is used as the basis for calculating tax equivalent expense. Additionally, tax equivalents expense increased due to an increase in the tax equivalents collected in the fuel cost recovery.

(1) The generation for 20232024 includes 99 millionthousand kWh of pre-commercial generation at ColbertJohnsonville CTsAeroderivative 9-11.CT Units 21-30. The generation for 2024 includes 137 millionthousand kWh of pre-commercial generation at Paradise CTsCT Units 5-7.

(4) Purchased power (natural gas and/or oil-fired) includes generation from Caledonia CC, which is currently a leased facility operated by TVA. Generation from Caledonia Combined Cycle Plant (" Caledonia CC") was 4,7985,464 million kWh and 4,0304,798 million kWh for the years ended September 30, 20242025 and 2023,2024, respectively.

Total interest expense increased $10$130 million for the year ended September 30, 2024,2025, as compared to the prior year. This increase was primarily driven by a $23$97 million increase from higher average balances on long-term debt and an $8 million increase from higher average rates on short-term debt, partially offset by a $13 million decrease from lower average rates on long-term debt, and a $5$51 million increase in interest on other financing leases, primarily driven by the lease financing arrangement with Johnsonville Aeroderivative Combustion Turbine Generation LLC ("JACTG"). This increase was partially offset by an $18 million decrease fromin interest on short-term debt primarily due to lower average balances on short-term debt, and a $3 million decrease due to lower interest expense related to finance leases.rates.

Other income, net increased $10$21 million for the year ended September 30, 2024,2025, as compared to the prior year. This increase was primarily driven by market gains on TVA's Investment funds and increases in interestexternal incomeservices primarily due to additional transmission projects as a result of economic development and higher interest ratesincome ason comparedcash investments due to a higher balance of cash held during the prioryear, year.partially offset by lower short-term rates earned on that cash.

Other net periodic benefit cost decreasedincreased $101$7 million for the year ended September 30, 2024,2025, as compared to the prior year. The decreaseincrease is primarily due to athe decreasedecreases in the amountdiscount ofrates deferred pension costs recognized. As a result of plan design changes, future contributions are expectedused to exceedmeasure net periodic benefit cost for the expenseyear under U.S. GAAP. Accordingly, TVA discontinued this regulatory accounting practice as all such deferred costs were recovered as ofended September 30, 2023.2025, Inas addition,compared to the prior year. Other net periodic benefit cost is subject to significant economic assumptions, such as changes in the discount raterate, usedCOLA, to measureand the benefitrate plans,of return on plan assets, that can materially impact TVA. See Note 2021 — Benefit Plans.

TVA depends on various sources of liquidity to meet cash needs and contingencies. TVA's primary sources of liquidity are cash from operations and proceeds from the issuance of short-term debt in the form of discount notes, along with periodic issuances of long-term debt. TVA's balance of short-term debt typically changes frequently as TVA issues discount notes to meet short-term cash needs and pay scheduled maturities of discount notes and long-term debt. TVA had $1.4 billion of power bonds mature in November 2025. TVA's next significant power bond maturity is $1.0 billion in MayFebruary 2025.2027. The periodic amounts of short-term debt issued are determined by near-term expectations for cash receipts, cash expenditures, and funding needs, while seeking to maintain a target range of cash and cash equivalents on hand. TVA may hold higher cash balances from time to time in response to potential market volatility or other business conditions. In addition, cash balances may include collateral received from counterparties.

In addition to cash from operations and proceeds from the issuance of short-term and long-term debt, TVA's sources of liquidity include four long-term revolving credit facilities totaling $2.7 billion, a $150 million credit facility with the United States Department of the Treasury ("U.S. Treasury"), and proceeds from other financings. See Note 1415 — Debt and Other Obligations — Credit Facility Agreements. TVA issued $4.0 billion and $1.0 billion of power bonds during 2025 and 2024, respectively. In addition, TVA redeemed $1.0 billion of power bonds during both 2025 and 2024 due to maturity. The TVA Board authorized TVA to issue power bonds and enter into other financing arrangements in an aggregate amount not to exceed $4.0$3.0 billion during 2025.2026. InFor theadditional fourthinformation quarterabout ofTVA debt issuance activity and debt instruments issued and outstanding at September 30, 2025 and 2024, TVAincluding issuedrates, $1.0maturities, billionoutstanding ofprincipal poweramounts, bondsand maturingredemption infeatures, Augustsee 2034.Note 15 — Debt and Other Obligations — Debt Securities Activity and Debt Outstanding. Other financing arrangements may include, but are not limited to, lease financings, energy prepayments from customers, and other similar agreements. In the first quarter of 2025, TVA entered into an $800 million construction management agreement and lease financing arrangement with Johnsonville Aeroderivative Combustion Turbine Generation LLC ("JACTG"). TVA may also engage in other alternative forms of financing such as sales of receivables, or loans, from time to time.

The TVA Act authorizes TVA to issue bonds, notes, or other evidences of indebtedness (collectively, "Bonds") in an amount not to exceed $30.0 billion outstanding at any time. Bonds outstanding, excluding unamortized discounts and premiums and net exchange gains from foreign currency transactions, at September 30, 20242025 and 2023,2024, were $20.2$22.1 billion (including current maturities) and $19.5$20.2 billion (including current maturities), respectively. The balance of Bonds outstanding directly affects TVA's capacity to meet operational liquidity needs and to strategically use Bonds to fund certain capital investments as management and the TVA Board may deem desirable. Other options for financing not subject to the limit on Bonds, including certain lease financings (see Lease Financings below and Note 1112 — Variable Interest Entities), could provide supplementary funding if needed. Currently, TVA expects to utilize a combination of BondsBonds, andother financings, or potentially additional power revenues through power rate increases to meet its ongoing operational liquidity needs while making planned capital investments through the decade.investments. TVA may also utilize available funding through the Inflation Reduction Act of 2022 ("Inflation Reduction ActIRA") and the Bipartisan Infrastructure Law ("BIL"), other federal funding opportunities, or other third-party financing arrangements. See Lease Financings, Key Initiatives and Challenges — OptimumFunding Energy Portfolio — Decarbonization,Opportunities, Note 1112 — Variable Interest Entities, and Note 1415 — Debt and Other Obligations for additional information.

TVA ended the year at September 30, 2024,2025, with a higherlower balance of short-term debt as compared to September 30, 2023.2024. The increasedecrease was primarily due to higher redemptions of long-termshort-term debt compared to the previous year, and the timing of cash flows.flows, including higher cash from issuance of long-term bonds in the fourth quarter in anticipation of cash needed to pay bond maturities in November 2025.

TVA Bonds are traded in the public bond markets and are listed on the New York Stock Exchange ("NYSE") except for TVA's discount notes, and the 2009 Series B power bonds, and the power bonds issued under TVA's electronotes® program.bonds. TVA's Putable Automatic Rate Reset Securities ("PARRS") are traded on the NYSE under the exchange symbols "TVC" and "TVE." Other bonds listed on the NYSE are assigned various symbols by the exchange, which may be noted on the NYSE's website. TVA has also listed certain bonds on foreign exchanges from time to time, including the Luxembourg, Hong Kong, and Singapore Stock Exchanges. See Part I, Item 1A, Risk Factors — Financial, Economic, and Market Risks for additional information regarding the market for TVA's Bonds.

Although TVA Bonds are not obligations of the U.S., TVA, as a corporate agency and instrumentality of the U.S. government, may be impacted if the sovereign credit ratings of the U.S. are downgraded. According to statements made by the credit rating agencies, the U.S. credit rating may face additional downward pressure if policymakers are unable to respond to the country's growing fiscal challenges, if it appears deterioration in debt affordability or fiscal strength is likely to undermine U.S. economic strength or the role of the U.S. dollar or U.S. Treasury bond market, or if a weakening of governance were to occur. Additionally, TVA may be impacted by how the U.S. government addresses situations of approaching its debt limit. On November 10, 2023, Moody's Investors Service, Inc. ("Moody's") revised the outlook on the U.S. government's credit ratings from stable to negative, and subsequently determined on November 13, 2023, to revise the outlook on TVA's ratings from stable to negative due to the change in the government rating outlook. On May 16, 2025, Moody's downgraded the U.S. government's credit rating from Aaa to Aa1, and on May 19, 2025, Moody's subsequently downgraded TVA's rating from Aaa to Aa1, and the outlook was revised to stable. TVA was not required to post additional collateral due to the downgrade. The outlook on the ratings of TVA is also currently stable with Fitch Ratings, Inc. ("Fitch") and S&P Global Ratings ("S&P") and Fitch Ratings, Inc. ("Fitch"); however, the outlook on TVA's ratings from Moody's Investors Service, Inc. ("Moody's") is negative due to Moody's change in the U.S. government rating outlook.. TVA's rated senior unsecured Bonds are currently rated Aaa,Aa1, AA+, and AA+, by Moody's, Fitch, and S&P, respectively. TVA's short-term discount notes are not rated. TVA is not able to predict the outcome of any rating changes on the U.S. government or any actions that may be taken on TVA because of actions on the government.

Lease Financings. TVA has entered into certain leasing transactions with special purpose entities ("SPEs") to obtain third-party financing for its facilities. These SPEs are sometimes identified as VIEs of which TVA is determined to be the primary beneficiary. TVA is required to account for these VIEs on a consolidated basis. See Note 1112 — Variable Interest Entities. In addition, TVA previously entered into leasing transactions to obtain third-party financing for 24 peaking CTs as well as certain qualified technological equipment and software ("QTE"). See Note 1 — Summary of Significant Accounting Policies for information about reacquired rights associated with these lease financing activities.

A major source of TVA's liquidity is operating cash flows resulting from the generation and sale of electricity. Cash, cash equivalents, and restricted cash totaled $523$1.6 millionbillion and $521$523 million at September 30, 20242025 and 2023,2024, respectively. A summary of cash flow components for the years ended September 30 follows:

Net cash flows provided by operating activities increased $131$321 million for the year ended September 30, 2024,2025, as compared to the same period of the prior year. The increase was primarily due to lowerhigher revenue collections. Revenue collections increased primarily due to the increase in the 2025 wholesale base rate in addition to higher sales volume and higher effective fuel prices and purchased power payments.rates. This increase was partially offset by lower revenue collections and higher payroll and benefit relatedbenefit-related payments in addition to higher fuel and purchased power payments as compared to the same period of the prior year. Revenue collections decreased primarily due to lower fuel and purchased power prices that were partially offset by the wholesale base rate increase that began in 2024, pandemic credits which ended in September 2023, and higher sales volume.

Net cash flows used in investing activities increased $597$1.1 millionbillion for the year ended September 30, 2024,2025, as compared to the same period of the prior year, primarily driven by increased expenditures for capacity expansion projectsprojects, partiallyprimarily offsetrelated byto decreasednatural expendituresgas forbuilds and upgrades to the nuclear fuel during the period. Nuclear fuel expenditures vary depending on the number of outages and the prices and timing of purchases of uranium and enrichment services.fleet.

Net cash flows provided by financing activities increased $467$1.8 millionbillion for the year ended September 30, 2024,2025, as compared to the prior year, primarily due to higher net short-term debt issuances forand capacityproceeds expansionfrom projects.debt of variable interest entities. Higher net cash flows provided by both financing and operating activities were partially offset by higher net cash used in investing activitiesactivities. whichThis resultednet inactivity contributed to the need for net debt issuances to maintain higher targeted cash balance levels duringat year end due to the period.timing of debt maturities. TVA anticipates a need to increase debt in the coming years as it continues to invest in power system assets, which may result in positive net cash flows provided by financing activities in future periods.

(1) Currently, TVA expects to utilize a combination of BondsBonds, andother financings, or potentially additional power revenues through power rate increases to meet its ongoing operational liquidity needs while making planned capital investments through the decade.investments. TVA may also utilize available funding through the Inflation Reduction ActIRA and the BIL, other federal funding opportunities, or other third-party financing arrangements. Estimated capital expenditures only include expenditures that are currently planned. Additional expenditures may be required, among other things, for TVA to meet growth in demand for power in its service area or to comply with new environmental laws, regulations, or orders.

Under the Tennessee Valley Authority Act of 1933, as amended ("TVA Act,Act"), a quorum of the TVA Board of Directors ("TVA Board") is five members. In January 2026, the TVA Board regained a quorum, and it currently has six members. Becoming a member of the TVA Board requires confirmation by the U.S. Senate following appointment by the President, and this process may be lengthy. In addition, the President may remove TVA Board members, and TVA Board members may resign or otherwise leave office before a successor is commissioned. Without a quorum, the TVA Board may not have authority to direct TVA into new areas of activity, to embark on new programs, or to change TVA's existing direction. As such, the loss of a quorum for an extended period of time may have a negative impact on TVA's ability to change the rates TVA charges for power, change long-term objectives, plans, and policies, and 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.

TVA's operating revenues were $6.6$10.0 billion and $6.5$9.8 billion for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively. Operating revenues increased for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year, primarily as a result of higher salesfuel volumecost recovery rates and higher sales volume. Higher fuel cost recovery rates.rates were due primarily to higher natural gas prices as compared to the same period of the prior year. The increased sales volume was primarily driven by higher sales within the data processing, web hosting, and related services sector. Higher fuel cost recovery rates were due primarily to higher fuel rates as a result of higher natural gas prices as compared to the same period of the prior year.

Total operating expenses increased $6$48 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the sixnine months ended MarchJune 31,30, 2025. Fuel and purchased power expense increased $144$253 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year primarily due to higher purchased power market prices and higher effective fuel rates as a result of higher natural gas prices, partially offset by reduced purchased power expense due to higher levels of TVA generation as compared to the same period of the prior year. Partially offsetting this increase was a $118$161 million decrease in Depreciation and amortization expense for the nine months ended June 30, 2026, as compared to the same period of the prior year primarily due to the depreciable life assumption changes for the Kingston Coal-Fired ("KIF") and Cumberland Coal-Fired ("CUF") Plants and the Browns Ferry Nuclear Plant ("Browns Ferry") subsequent license renewal ("SLR"). These decreases in Depreciation and amortization expense were partially offset by an increase due to depreciation of additions to net completed plant. In addition, Operating and maintenance expense decreased by $76 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year primarily due to Inflation Reduction Act of 2022 ("IRA") tax credits recorded in the sixnine months ended MarchJune 31,30, 2026, and decreases in payroll and benefit costs. In addition, Depreciation and amortization expense decreased by $37 million primarily due to the Browns Ferry Nuclear Plant ("Browns Ferry") subsequent license renewal ("SLR") and the depreciable life assumptions for the Kingston and Cumberland Fossil Plants. These decreases in Depreciation and amortization expense were partially offset by an increase due to depreciation of additions to net completed plant.2026.

Sales of electricity were 41,96640,227 million and 42,74539,751 million kilowatt hours ("kWh") for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Sales of electricity were 81,543121,771 million and 80,776120,527 million kWh for the sixnine months ended MarchJune 31,30, 2026 and 2025, respectively. The total sales of electricity during the sixnine months ended MarchJune 31,30, 20252026, included 5960 thousand kWh of pre-commercial generation at CUG, of which 60 thousand kWh was recognized in the three months ended June 30, 2026. The total sales of electricity during the nine months ended June 30, 2025, included 94 thousand kWh of pre-commercial generation at the Johnsonville Aeroderivative Combustion Turbine ("CT") Facility ("Johnsonville Facility"), of which 4935 thousand kWh was recognized in the three months ended MarchJune 31,30, 2025. TVA sells power at wholesale rates to local power company customers ("LPCs") 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 TVA's system needs is sold under exchange power arrangements with certain other power systems.

Sales of electricity increased one percent for the sixthree months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. Sales volume increased primarily due to higher sales within the data processing, web hosting, and related services sector. Partially offsetting this increase was a 33 percent decrease in heating degree days.

The following table compares operating results for the three and sixnine months ended MarchJune 31,30, 2026 and 2025:

Operating Revenues. Operating revenues for both the three months ended MarchJune 31,30, 2026 and the three months ended March 31, 2025, were $3.5$3.4 billion.billion and $3.3 billion, respectively. Operating revenues for the sixnine months ended MarchJune 31,30, 2026 and 2025, were $6.6$10.0 billion and $6.5$9.8 billion, respectively. The following table compares TVA's operating revenues for the periods indicated:

(1) Represents revenue capitalized during pre-commercial operations at CUG for the three and nine months ended June 30, 2026, and the Johnsonville Facility for the three and sixnine months ended MarchJune 31,30, 2025.

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 each accounted for seveneight percent and eight percent, respectively, of TVA's total operating revenues for both the sixnine months ended MarchJune 31,30, 20262026, and the sixnine months ended MarchJune 31,30, 2025.

TVA has a 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 to no more than 10 percent during any consecutive five-fiscal-year period, as more specifically described in the agreements. Participating LPCs 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 MarchJune 31,30, 2026, 148 LPCs had signed the 20-year Partnership Agreement with TVA.

(2) Represents revenue capitalized during pre-commercial operations at CUG for the three and nine months ended June 30, 2026, and the Johnsonville Facility for the three and sixnine months ended MarchJune 31,30, 2025.

Operating revenues increased $14$136 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year, primarily due to a $76$96 million increase in fuel cost recovery revenue driven by a $96$82 million increase attributable to higher fuel cost recovery rates, as well as a $14 million increase attributable to higher sales volume. In addition, there was a $34 million increase in base revenue. The $34 million increase in base revenue was driven by a $36 million increase attributable to higher sales volume, partially offset by a $20$2 million decrease attributable to lower effective base rates. Higher sales volume.volume Thewas driven by higher fuelsales costwithin recoverythe ratesdata processing, web hosting, and related services sector, which were primarilypartially dueoffset toby highera naturaldecrease gasin pricesheating degree days as compared to the same period of the prior year. The increase in fuel cost recovery revenue was partially offset by a $70 million decrease in base revenue. The $70 million decrease in base revenue was driven by a $59 million decrease attributable to lower sales volume and an $11 million decrease attributable to lower effective base rates. Lower sales volume was driven by weather conditions that were milder as compared to the same period of the prior year which were partially offset by higher sales within the data processing, hosting, and related services sector.

Operating revenues increased $143$279 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year, primarily due to a $82$144 million increase in fuel cost recovery revenue. The $144 million increase in fuel cost recovery revenue was driven by a $115 million increase attributable to higher fuel cost recovery rates as a result of higher natural gas prices as compared to the same period of the prior year and a $29 million increase attributable to higher sales volume. In addition, there was a $116 million increase in base revenue. The $82$116 million increase in base revenue was driven by a $67$103 million increase attributable to higher sales volume and a $15$13 million increase attributable to higher effective base rates. The higher sales volume was primarily due to higher sales within the data processing, web hosting, and related services sector. In addition, there was a $48 million increase in fuel cost recovery revenue. The $48 million increase in fuel cost recovery revenue was driven by a $31 million increase attributable to higher fuel rates as a result of higher natural gas prices as compared to the same period of the prior year and a $17 million increase attributable to higher sales volume.

Operating Expenses. Operating expense components as a percentage of total operating expenses for the three and sixnine months ended MarchJune 31,30, 2026 and 2025, consisted of the following:

Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025

Fuel expense increased $103$96 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This increase was primarily duedriven toby an increase in effective fuel ratescost recovery of $73 million due to higherthe naturalrecovery gasof prices, resulting in a $115 million increase inunplanned fuel expense.costs during the winter of 2026. Additionally, fuel expense increased $40$26 million due to higher levels of TVA generation as compared to the same period of the prior year. Partially offsetting these increases was a decrease of $52$3 million in effective fuel rates due to thehigher deferralavailability of significantnuclear expensesgeneration thatas werecompared to the resultsame period of higherthe thanprior expected natural gas prices.year.

Purchased power expense increased $16$13 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This increase was primarily due to an increase in purchased power expense of $48 million due to the recovery of unplanned purchased power costs during the winter of 2026. Additionally, purchased power expense increased due to higher purchased power market prices compared to the same period of the prior year, resulting in a $246$29 million increase. Partially offsetting thisthese increaseincreases was a decrease of $196$64 million due to higher levels of TVA generation as compared to the same period of the prior year. Additionally, purchased power expense decreased $34 million due to the deferral of significant expenses that were the result of higher than expected market prices.

Operating and maintenance expense decreasedincreased $62$42 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This decreaseincrease was driven by a $48$16 million decreaseincrease in payroll and benefit costs primarily duefor tolabor escalation and severance costs and an $18 million increase in technology costs associated with thehigher Enterprise Transformation Program ("ETP") efforts in the three months ended March 31, 2025,license and asubscription decreasecosts inand headcountadditional ascloud comparedasset to the prior year.amortization.

Depreciation and amortization expense decreased $51$124 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This decrease was primarily driven by a $99 million decrease due to depreciable life assumption changes for CUF and KIF, and a $45 million decrease in depreciation expense due to the December 2025 Browns Ferry SLR, which extended the useful life of the three nuclear units for an additional 20 years, and a $33 million decrease due to the depreciable life assumptions for the Cumberland and Kingston Fossil Plants.years. Partially offsetting these decreases was an increase due to depreciation of additions to net completed plant.

Tax equivalents expense increased $10$15 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This change is primarily driven by an increase in TVA's revenue from sales of electricity in 2025, which is used as the basis for calculating tax equivalent expense.

SixNine Months Ended MarchJune 31,30, 2026, Compared to SixNine Months Ended MarchJune 31,30, 2025

Fuel expense increased $112$208 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This increase was primarily due to an increase in effective fuel rates due to higher natural gas prices, resulting in a $133$129 million increase in fuel expense. Additionally, fuel expense increased $70$97 million due to higher levels of TVA generation as compared to the same period of the prior year. Partially offsetting these increases was a decrease of $91$18 million due to the deferral of significant expenses that were the result of higher than expected natural gas prices.

Purchased power expense increased $32$45 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This increase was primarily due to higher purchased power market prices compared to the same period of the prior year, resulting in a $299$326 million increase. Partially offsetting this increase was a decrease of $199$261 million due to higher levels of TVA generation as compared to the same period of the prior year. Additionally, purchased power expense decreased $68$20 million due to the deferral of significant expenses that were the result of higher than expected market prices.

Operating and maintenance expense decreased $118$76 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This decrease was primarily due to IRA tax credits recorded in the three months ended December 31, 2025, which contributed $62 million to the overall decrease. These credits were recognized as a reduction in Operating and maintenance expense based on what the credits were intended to reimburse. See Note 1 — Summary of Significant Accounting Policies — Government Grants. In addition, there was a $48 million decrease in payroll and benefit costs primarily due to severance costs associated with the ETP efforts in the six months ended March 31, 2025, and a decrease in headcount as compared to the prior year.

Depreciation and amortization expense decreased $37$161 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This decrease was primarily driven by a $60$132 million decrease due to depreciable life assumption changes for CUF and KIF, and a $105 million decrease in depreciation expense due to the December 2025 Browns Ferry SLR, which extended the useful life of the three nuclear units for an additional 20 years, and a $33 million decrease due to the depreciable life assumptions for the Cumberland and Kingston Fossil Plants.years. Partially offsetting these decreases was an increase due to depreciation of additions to net completed plant.

Tax equivalents expense increased $17$32 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This change is primarily driven by an increase in TVA's revenue from sales of electricity in 2025, which is used as the basis for calculating tax equivalent expense.

(1) The generation for the three months ended MarchJune 31,30, 20252026, included 4960 thousand kWh of pre-commercial generation at CUG. The generation for the three months ended June 30, 2025, included 35 thousand kWh of pre-commercial generation at the Johnsonville Facility.

(3) Raccoon Mountain Pumped-Storage Plant net generation is allocated against each TVA-operated generation facility and purchased power type for both the three months ended MarchJune 31,30, 2026, and three months ended MarchJune 31,30, 2025. See Part I, Item 1, Business — Power Supply and Load Management Resources — Hydroelectric Pumped-Storage in the Annual Report for a discussion of Raccoon Mountain Pumped-Storage Plant.

(4) Purchased power (natural gas and/or oil-fired) includes generation from Caledonia Combined Cycle Plant ("Caledonia CC"), which is currently a leased facility operated by TVA. Generation from Caledonia CC was 1,1411,081 million kWh and 1,4861,484 million kWh for the three months ended MarchJune 31,30, 2026, and 2025, respectively.

(1) The generation for the sixnine months ended MarchJune 31,30, 20252026, included 5960 thousand kWh of pre-commercial generation at CUG. The generation for the nine months ended June 30, 2025, included 94 thousand kWh of pre-commercial generation at the Johnsonville Facility.

(3) Raccoon Mountain Pumped-Storage Plant net generation is allocated against each TVA-operated generation facility and purchased power type for both the sixnine months ended MarchJune 31,30, 2026, and sixnine months ended MarchJune 31,30, 2025. See Part I, Item 1, Business — Power Supply and Load Management Resources — Hydroelectric Pumped-Storage in the Annual Report for a discussion of Raccoon Mountain Pumped-Storage Plant.

(4) Purchased power (natural gas and/or oil-fired) includes generation from Caledonia CC, which is currently a leased facility operated by TVA. Generation from Caledonia CC was 2,1613,242 million kWh and 2,7243,958 million kWh for the sixnine months ended MarchJune 31,30, 2026, and 2025, respectively.

In addition to power supply sources included here, TVA offers energy efficiency programs that effectively reduce energy needs. In 2026, TVA expects to invest $133$146 million on its energy efficiency programs and anticipates approximately 400406 gigawatt hours of net incremental energy efficiency savings. During the three and sixnine months ended MarchJune 31,30, 2026, TVA invested $55$42 million and $82$90 million on energy efficiency programs, respectively.

Interest Expense. Interest expense and interest rates for the three and sixnine months ended MarchJune 31,30, 2026, and the three and sixnine months ended MarchJune 31,30, 2025, were as follows:

Total interest expense increased $15$9 million for the three months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This increase was primarily driven by a $16$5 million increase from higher average balances and rates on longshort‐term debt and a $3$5 million increase in interest from higher average balances on short-termother debt.financing leases, primarily the new lease financing arrangement with Cumberland Combined Cycle Generation LLC ("CCCGL"). This increase was partially offset by lowera $1 million decrease in interest on short-term debt primarily due to lower average rates.

Total interest expense increased $44$53 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. This increase was primarily driven by a $49$50 million increase from higher average balances and rates on long-term debt and a $2$7 million increase in interest from higher average balances on short-term debt. This increase was partially offset by lowera $4 million decrease in interest on short-term debt primarily due to lower average rates.

In addition to cash from operations and proceeds from the issuance of short-term and long-term debt, TVA's other sources of potential liquidity include three revolving credit facilities totaling $2.5 billion, a $150 million credit facility with the United States Department of the Treasury ("U.S. Treasury"), and proceeds from other financings. See Note 13 — Debt and Other Obligations — Credit Facility Agreements. The TVA Board of Directors ("TVA Board") authorized TVA to issue power bonds and enter into other financing arrangements in an aggregate amount not to exceed $3.0 billion during 2026. Other financing arrangements may include, but are not limited to, lease financings, transactions supported by certain PPAs,power purchase agreements, energy prepayments from customers, and other similar agreements. TVA may also engage from time to time in other alternative forms of financing such as sales of receivables or loans.

The Tennessee Valley Authority Act of 1933, as amended ("TVA Act"), authorizes TVA to issue bonds, notes, or other evidences of indebtedness (collectively, "Bonds") in an amount not to exceed $30.0 billion outstanding at any time. Bonds outstanding, excluding unamortized discounts and premiums and net exchange gains from foreign currency transactions, at MarchJune 31,30, 2026, were $22.1$21.2 billion (including current maturities). The balance of Bonds outstanding directly affects TVA's capacity to meet operational liquidity needs and to strategically use Bonds to fund certain capital investments as management and the TVA Board may deem desirable. Other options for financing not subject to the limit on Bonds could provide supplementary funding if needed. Currently, TVA expects to utilize a combination of Bonds, other financings, or potentially additional power revenues through power rate increases to meet its ongoing operational liquidity needs while making planned capital investments. TVA may also receive funding by filing for credits available under the IRA, by applying for grants or other funding available under the Bipartisan Infrastructure Law ("BIL"), from other federal funding opportunities, or from other third- partythird-party financing arrangements. See Lease Financings below, Key Initiatives and Challenges — Funding Opportunities, Note 10 — Variable Interest Entities, and Note 13 — Debt and Other Obligations for additional information.

Debt Securities. TVA's Bonds are not obligations of the U.S.,United States ("U.S."), and the U.S. does not guarantee the payments of principal or interest on Bonds. TVA's Bonds consist of power bonds and discount notes. Power bonds have maturities of between one and 50 years. At MarchJune 31,30, 2026, the average maturity of long-term power bonds was 14.2213.99 years, and the weighted average interest rate was 4.74 percent. Discount notes have maturities of less than one year. Power bonds and discount notes have a first priority and equal claim of payment out of net power proceeds. Net power proceeds are defined as the remainder of TVA's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties and tax equivalents, 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. In addition to power bonds and discount notes, TVA had long-term debt associated with certain VIEs outstanding at MarchJune 31,30, 2026. See Lease Financings below, Note 10 — Variable Interest Entities, and Note 13 — Debt and Other Obligations for additional information.

A major source of TVA's liquidity is operating cash flows resulting from the generation and sale of electricity. Cash, cash equivalents, and restricted cash totaled $522$1.5 millionbillion and $547$522 million at MarchJune 31,30, 2026 and 2025, respectively. A summary of cash flow components for the sixnine months ended MarchJune 31,30, 2026 and 2025, follows:

Net cash flows provided by operating activities decreased $355$193 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. The decrease was primarily due to higher fuel and purchased power payments, significantlythe fewertermination customerof deposits,the distributor prepayment program at the end of 2025, and loweran customerincrease collectionsin refunds of transmission interconnection related deposits as compared to the same period of the prior year. Fewer customer deposits were primarily driven by the conclusion of certain transmission studies. Lower customer collections were primarily the result of theThe distributor prepayment program which allowed for customers to prepay their invoices and receive interest credits. TheThese programdecreases terminatedwere onpartially Septemberoffset 30,by 2025.higher customer collections as a result of increased sales volume.

Net cash flows used in investing activities decreased $463$629 million for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. The decrease was driven by less spend related to capacity expansion projects, primarily related to the Cumberland natural gas project nearing completion and higher spend on the Kingston natural gas project in the prior year. In addition, during the sixnine months ended MarchJune 31,30, 2026, TVA received cash related to insurance proceeds for property recovery and IRA tax credits related to capital assets.

Net cash provided by financing activities decreased $1.2$527 billionmillion for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of the prior year. The decrease is primarily due to thea timingdecrease of debt maturities related toin power bond redemptions,issuances combined with lower proceeds from debt of variable interest entities, along with the use of cash on hand to pay bond maturities. The decrease was partially offset with proceeds from debt of variable interest entities and higher net short-term debt issuance, as compared to the same period of the prior year. TVA anticipates a need to increase debt in the coming years as it continues to invest in power system assets, which may result in positive net cash flows provided by financing activities in future periods.

During the sixnine months ended MarchJune 31,30, 2026, TVA's power purchase obligations increased $1.2 billion primarily due to TVA signedsigning two battery energy storage system agreements which are expected to commence by the summer of 2029. The terms of the agreements are 20 years and capacity payments over the terms of the agreements are expected to total over $1.3 billion. Both agreements include a lease component. In addition, TVA's fuel purchase obligations also increased $222$574 million primarily due to new and/or extended contracts for naturalnuclear gas with commitments from 2026 to 2035fuel and increased contract costs for natural gas transportation. Nuclear fuel commitments are from 2026 to 2037 and natural gas transportation commitments are from 2026 to 2056. In addition, TVA entered into a new lease financing arrangement during the nine months ended June 30, 2026. See Note 10 — Variable Interest Entities.

Natural Gas Fired Units. TVA is constructing a 200 MW aeroderivative CT project at TVA's Allen site. An approved construction air permit was received in December 2025. As of MarchJune 31,30, 2026, TVA had spent $254$276 million on the project at Allen and could spend up to an additional $109$155 million.

TVA is constructingplanning to construct a 350 MW project at TVA's Lagoon Creek site for four additional CTs. TVA completed an Environmental Impact Statement ("EIS") for 16 units at the site prior to construction of the currently operational 12 units, and in December 2025, TVA deemed that the existing EIS fulfilled National Environmental Policy Act ("NEPA") requirements for the additional CTs. As of MarchJune 31,30, 2026, TVA had spent $2 million on the project at Lagoon Creek and could spend up to an additional $668 million.

Pre-commercial plant operations began on CumberlandCUG Combined Cycle Plant UnitUnits 1 inand April2 during the third quarter of 2026.

Nuclear Fleet License Extensions. Subject to the completion of all appropriate environmental reviews, TVA is seeking to renew all nuclear generation units' licenses for an additional 20 years. A license renewal application was submitted to the Nuclear Regulatory Commission ("NRC") in January 2024 for the three units at Browns Ferry, and the renewal was approved by the NRC in December 2025.

Coal-Fired Fleet. In February 2026, TVA published final supplemental EISs with the preferred alternatives of continued operations of the KingstonKIF and Cumberland Fossil PlantsCUF in conjunction with the other capacity projects being constructed at the Kingston and Cumberland sites. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Capacity — Natural Gas-Fired Units and — Coal-Fired Fleet in the Annual Report.

In addition, in February 2026, the TVA Board separately authorized TVA, at the direction and discretion of the CEO, to operate the KingstonKIF and Cumberland Fossil PlantsCUF in accordance with all applicable laws and regulatory requirements, including all requirements imposed by any applicable permits, and directed TVA staff to apply for any permits that may be applicable for TVA to continue to operate the coal units along with the new gas units. In March 2026, TVA submitted requests to the Tennessee Department of Environment and Conservation (“TDEC”) for modifications of the National Pollutant Discharge Elimination System permits for the KingstonKIF and Cumberland Fossil PlantsCUF that would allow continued operations past December 31, 2028. In addition,May 2026, TVA issubmitted developingan itsinitial Prevention of Significant Deterioration (“PSD”) permit applicationsapplication for the new gas units beingat constructedthe Cumberland site, and TVA is developing a PSD permit application for the new gas units at the Kingston and Cumberland sites.site. TVA will need to obtain these PSD permits in order to operate the coal units along with the new gas units in the absence of regulatory relief. See Note 21 — Commitments and Contingencies — Legal Proceedings — Notice of Intent to Sue for Alleged Violations of Clean Air Act at Cumberland for a discussion of potential litigation involving the coal and gas units at the Cumberland site, and see Note 21 — Commitments and Contingencies — Legal Proceedings — Notice of Intent to Sue for Alleged Violations of Clear Air Act at Kingston for a discussion of potential litigation involving the coal and gas units at the Kingston site.

Battery Energy Storage. During the sixnine months ended MarchJune 31,30, 2026, TVA signed two battery energy storage system agreements which are expected to commence by the summer of 2029. The terms of the agreements are 20 yearsyears, and capacity payments over the terms of the agreements are expected to total over $1.3 billion.

TVA continues to evaluate and pursue funding opportunities under the IRA and the BIL to help offset the cost of qualifying projects. The IRA makes certain tax-exempt entities, including TVA, eligible for a direct-pay option for certain tax credits for zero-emission energy projects or generation. AsAt ofJune March 31,30, 2026, TVA had recorded $112 million in Accounts receivable, net related to these tax credits. In addition, TVA received $26 million during the sixnine months ended MarchJune 31,30, 2026, related to these credits.