Company: TVC
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001376986-25-000029
Chunk: 4

Company: Tennessee Valley Authority
Filing Date: 2025-05-01
Form: 10-Q
Item: Part II, Item 14
Chunk 4
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 maintain average balances of short-term debt equal to or in excess of the combined notional amount of the interest rate swaps.    Commodity Derivatives.  TVA enters into certain derivative contracts for natural gas that require physical delivery of the contracted quantity of the commodity.  TVA may also enter into power purchase agreements ("PPAs") that provide an option to financially settle contracted power deliveries.  This option creates an embedded derivative in the hosting PPA.  TVA marks to market these contracts and defers the unrealized gains (losses) as regulatory liabilities (assets).  At March 31, 2025, TVA's natural gas contract derivatives had terms of up to 11 years.Commodity Contract Derivatives  At March 31, 2025At September 30, 2024 Number of ContractsNotional AmountFair Value (MtM)(in millions)Number of ContractsNotional AmountFair Value (MtM)(in millions)Natural gas contract derivatives39468 million mmBtu$5 45321 million mmBtu$2 Commodity Derivatives under the FHP.  Currently, TVA is hedging exposure to the price of natural gas under the FHP.  There is no Value at Risk aggregate transaction limit under the current FHP structure, but the TVA Board reviews and authorizes the use of tolerances and measures annually.  TVA's FHP policy prohibits trading financial instruments under the FHP for speculative purposes.  At March 31, 2025, TVA's natural gas swap contracts under the FHP had remaining terms of up to three years.Commodity Derivatives under Financial Hedging Program(1)At March 31, 2025At September 30, 2024Number of ContractsNotional AmountFair Value (MtM)(in millions)Number of ContractsNotional AmountFair Value (MtM)(in millions)Natural gas swap contracts161244 million mmBtu$95 126230 million mmBtu$(161)Note(1)  Fair value amounts presented are based on the net commodity position with the counterparty.  Notional amounts disclosed represent the net value of contractual amounts.TVA defers all FHP unrealized gains (losses) as regulatory liabilities (assets) and records the realized gains or losses in Fuel expense and Purchased power expense to match the delivery period of the underlying commodity. 

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