Company: TVC
Filing Date: 2025-02-05
Form Type: 10-Q
Source: 0001376986-25-000011
Chunk: 93

Company: Tennessee Valley Authority
Filing Date: 2025-02-05
Form: 10-Q
Item: Part I, Item 1
Chunk 93
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 are reported net of allowances for uncollectible accounts of $2 million at both December 31, 2024, and September 30, 2024.Pre-Commercial Plant OperationsAs part of the process of completing the construction of a generating unit, the electricity produced is used to serve the demands of the electric system.  TVA estimates revenues earned during pre-commercial operations at the fair value of the energy delivered based on TVA's hourly incremental dispatch cost.  Pre-commercial plant operations began on Paradise combustion turbine ("CT") Units 5-7 in the first quarter of 2024, and the units became operational on December 29, 2023.  Estimated revenue of $3 million related to this project was capitalized to offset project costs for the three months ended December 31, 2023.  TVA also capitalized related fuel costs for this project of $3 million for the three months ended December 31, 2023.  Pre-commercial plant operations began on Johnsonville Aeroderivative CT Units 25-28 in the first quarter of 2025.  Estimated revenue of less than $1 million related to this project was capitalized to offset project costs for the three months ended December 31, 2024.  TVA also capitalized related fuel costs for this project of less than $1 million for the three months ended December 31, 2024.

13

Depreciation    TVA accounts for depreciation of its properties using the composite depreciation convention of accounting.  Under the composite method, assets with similar economic characteristics are grouped and depreciated as one asset.  Depreciation is generally computed on a straight-line basis over the estimated service lives of the various classes of assets.  The estimation of asset useful lives requires management judgment, supported by external depreciation studies of historical asset retirement experience.  Depreciation rates are determined based on external depreciation studies that are updated approximately every five years, with the latest study implemented during the first quarter of 2022.  Depreciation expense was $471 million and $452 million for the three months ended December 31, 2024 and 2023, respectively.  See Note 6 — Plant Closures for a discussion of the impact of plant closures.

 2.  Impact of New Accounting Standards and Interpretations     

The following accounting standards or rules have been issued but as of December 31, 2024, were not effective and have not been adopted by TVA:Improvements to Reportable Segment Disc