Company: TVC
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001376986-25-000056
Chunk: 135

Company: Tennessee Valley Authority
Filing Date: 2025-11-13
Form: 10-K
Item: Item 8
Chunk 135
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 any gain (loss) were to be incurred as a result of the early termination of the foreign currency swap contract, the resulting income (expense) would be amortized over the remaining life of the associated Bond as a component of Interest expense.  The values of the currency swap liabilities are included in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets.    Derivatives Not Receiving Hedge Accounting TreatmentInterest Rate Derivatives.  Generally TVA uses interest rate swaps to fix variable short-term debt to a fixed rate, and  TVA uses regulatory accounting treatment to defer the MtM gains and losses on its interest rate swaps.  The net deferred unrealized gains and losses are classified as regulatory liabilities or assets on TVA's Consolidated Balance Sheets and are included in the ratemaking formula when gains or losses are realized.  The values of these derivatives are included in Other 

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current assets, Accounts payable and accrued liabilities, Accrued interest, and Other long-term liabilities on the Consolidated Balance Sheets, and realized gains and losses, if any, are included on TVA's Consolidated Statements of Operations.  For the years ended September 30, 2025 and 2024, the changes in fair market value of the interest rate swaps resulted in the reduction in unrealized losses of $145 million and the increase in unrealized losses of $182 million, respectively.  TVA may hold short-term debt balances lower than the notional amount of the interest rate swaps from time to time due to changes in business conditions and other factors.  While actual balances vary, TVA generally plans to maintain average balances of short-term debt equal to or in excess of the combined notional amount of the interest rate swaps.Commodity Contract Derivatives.  TVA enters into certain commodity contract derivatives for natural gas that require physical delivery of the contracted quantity.  TVA may also enter into 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 September 30, 2025, TVA's natural gas commodity contract derivatives had terms of up to 10 years.Commodity Contract Derivatives At September 30 20252024 Number of ContractsNotional AmountFair Value (MtM)(in millions)Number of ContractsNotional AmountFair Value (MtM