Company: TVC
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001376986-25-000056
Chunk: 389

Company: Tennessee Valley Authority
Filing Date: 2025-11-13
Form: 10-K
Item: Item 7
Chunk 389
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 CostsFor the years ended September 30(in millions)202520242023Operating lease costs(1)$73 $77 $69 Variable lease costs(1)(5)337 258 134 Short-term lease costs(1)15 10 18 Finance lease costsAmortization of lease assets(2)91 79 57 Interest on lease liabilities(3)(4)46 37 43 Total finance lease costs137 116 100      Total lease costs$562 $461 $321 Notes(1)  Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations.(2)  Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations.(3)  Expense is included in Interest expense on the Consolidated Statements of Operations.(4)  Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense.(5)  Variable lease costs include costs related to variable payments that are based on energy production levels, which are allocated to expense based on the determination of lease and non-lease components associated with the underlying agreements.    TVA's variable lease costs are primarily related to energy payments that are based on energy production levels.  Payments under those agreements are solely based on the actual output over the lease term.  Certain TVA lease agreements contain renewal options.  Those renewal options that are reasonably certain to be exercised are included in the lease measurements.The following table contains additional information with respect to cash and non-cash activities related to leases:Amounts Recognized on TVA's Consolidated Statements of Cash FlowsFor the years ended September 30(in millions)202520242023Operating cash flows for operating leases$72 $78 $77 Operating cash flows for finance leases46 37 43 Financing cash flows for finance leases82 76 56 Lease assets obtained in exchange for lease obligations (non-cash)Operating leases$14 $115 $84 Finance leases28 230 3 TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement.  This resulted in an interest rate that was higher than TVA's incremental borrowing rate.  The weighted average remaining lease terms in years and the weighted average discount rate for TVA's operating and finance