Company: TVC
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001376986-25-000056
Chunk: 138

Company: Tennessee Valley Authority
Filing Date: 2025-11-13
Form: 10-K
Item: Item 8
Chunk 138
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, Inc. ("Moody's") downgrades TVA's credit rating to AA or Aa2, respectively, TVA's collateral obligations would likely increase by $22 million, and•If TVA ceases to be majority-owned by the U.S. government, TVA's credit rating would likely be downgraded and TVA would be required to post additional collateral.Counterparty Risk    TVA may be exposed to certain risks when a counterparty has the potential to fail to meet its obligations in accordance with agreed terms.  These risks may be related to credit, operational, or nonperformance matters.  To mitigate certain counterparty risk, TVA analyzes the counterparty's financial condition prior to entering into an agreement, establishes credit limits, monitors the appropriateness of those limits, as well as any changes in the creditworthiness of the counterparty, on an ongoing basis, and when required, employs credit mitigation measures, such as collateral or prepayment arrangements and master purchase and sale agreements.

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Customers.  TVA is exposed to counterparty credit risk associated with trade accounts receivable from delivered power sales to LPCs, and from industries and federal agencies directly served, all located in the Tennessee Valley region.  Of the $1.9 billion and $1.7 billion of receivables from power sales outstanding at September 30, 2025 and 2024, respectively, nearly all of the counterparties were rated investment grade.  The majority of the obligations of these customers that are not investment grade are secured by collateral.  TVA is also exposed to risk from exchange power arrangements with a small number of investor-owned regional utilities related to either delivered power or the replacement of open positions of longer-term purchased power or fuel agreements.  TVA believes its policies and procedures for counterparty performance risk reviews have generally protected TVA against significant exposure related to market and economic conditions.  See Note 1 — Summary of Significant Accounting Policies — Allowance for Uncollectible Accounts, Note 4 — Accounts Receivable, Net, and Note 10 — Other Long-Term Assets. TVA had revenue from two LPCs that collectively accounted for 17 percent of total operating revenues for both the years ended September 30, 2025 and 2024. Suppliers.  TVA assesses potential supplier performance risks, including procurement of fuel, purchased power, parts, and services.  If suppliers are unable or unwilling to perform under TVA's existing contracts, if TVA is unable to obtain