Company: TVC
Filing Date: 2025-11-13
Form Type: 10-K
Source: 0001376986-25-000056
Chunk: 408

Company: Tennessee Valley Authority
Filing Date: 2025-11-13
Form: 10-K
Item: Item 7
Chunk 408
---
 the obligation at the present value of the future estimated costs.  TVA bases its decommissioning estimates for each asset on its identified preferred closure method.

On May 8, 2024, the Environmental Protection Agency ("EPA") published its Legacy CCR Rule, which expanded the scope of the regulatory requirements of EPA's 2015 CCR rule, as revised ("2015 CCR Rule"), to include two additional classes of coal combustion residual ("CCR") units: legacy CCR surface impoundments ("Legacy SIs") and CCR management units ("CCRMUs").  Legacy SIs include inactive surface impoundments at retired generating facilities that were exempt from the 2015 CCR Rule.  CCRMUs are a newly defined category that includes previously unregulated areas at CCR facilities where CCR may have been beneficially reused in an unencapsulated manner, disposed of, placed, or managed on land outside of CCR units regulated by the 2015 CCR Rule.  TVA records the fair value of a liability for an ARO in the period in which it is incurred if a reasonable estimate of fair value can be made.  As a result of the enactment of the final rule, during 2024, TVA recorded additional estimated AROs of $3.1 billion and recorded a corresponding regulatory asset of $3.1 billion due to these AROs being associated with closed sites and asset retirement costs having been fully depreciated.  Key assumptions used to determine this estimate include the preliminary identification of Legacy SIs and CCRMUs at TVA facilities impacted by the rule, the anticipated number of acres per newly regulated CCR unit, the expected closure method, a cost benchmark per acre based on sites currently being remediated, the potential duration of closure activities, and the escalation and discount factors.  There are legal challenges to the Legacy CCR Rule that may impact the number and scope of newly regulated units and the determinations on final closure requirements and performance standards.  Revisions to the additional estimated non-nuclear AROs from the Legacy CCR Rule will be made whenever factors indicate that the timing or amounts of estimated cash flows have changed.  See also Note 23 — Commitments and Contingencies — Environmental Matters.

Revisions in non-nuclear estimates decreased the liability balance by $563 million for the year ended September 30, 2025.  The decrease was primarily attributable to a change in closure liabilities related to the final Legacy CCR Rule for updated cost