Company: TVC
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001376986-25-000056
Chunk: 40

Company: Tennessee Valley Authority
Filing Date: 2025-11-13
Form: 10-K
Item: Item 6
Chunk 40
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 of certain tangible long-lived assets.  These obligations relate to TVA's generating facilities, including coal-fired, nuclear, hydroelectric, and natural gas and/or oil-fired.  They also pertain to coal ash impoundments, transmission facilities, and other property-related assets.  Activities involved with the retirement of these assets could include decontamination and demolition of structures, removal and disposal of wastes, and site restoration.  TVA periodically reviews its estimated asset retirement obligation ("ARO") liabilities.  Revisions to the ARO estimates are made whenever factors indicate that the timing or amounts of estimated cash flows have changed.  Any change to an ARO liability is recognized prospectively as an equivalent increase or decrease in the carrying value of the capitalized asset.  Any accretion or depreciation expense related to these liabilities and assets is charged to a regulatory asset.  See Note 11 — Regulatory Assets and Liabilities — Nuclear Decommissioning Costs and Non-Nuclear Decommissioning Costs and Note 14 — Asset Retirement Obligations for explanations of changes in estimates.

The initial obligation is measured at its estimated fair value using various judgments and assumptions.  Fair value is developed using an expected present value technique that is based on assumptions of market participants and that considers estimated retirement costs in current period dollars that are inflated to the anticipated decommissioning date and then discounted back to the date the ARO was incurred.  Changes in assumptions and estimates included within the calculations of the value of the AROs could result in different results than those identified and recorded in the financial statements, including amortization of the regulatory assets.

    Nuclear Decommissioning.  Decommissioning cost studies are updated for each of TVA's nuclear unit's long-lived assets at least every five years.  At September 30, 2025, the estimated future nuclear decommissioning cost recognized in the financial statements was $4.0 billion and was included in AROs, and the unamortized regulatory asset related to nuclear decommissioning ARO costs of $149 million was included in Regulatory assets.

    The following key assumptions can have a significant effect on estimates related to the nuclear decommissioning costs reported in TVA's nuclear ARO liability: 

    Timing and Method – In projecting decommissioning costs, two assumptions must be made to estimate the timing of plant decommissioning.  First, the date of the plant's retirement must be estimated.  At Browns Ferry and Sequoyah, the estimated retirement date is based