Company: TVC
Filing Date: 2025-07-29
Form Type: 10-Q
Source: 0001376986-25-000044
Chunk: 477

Company: Tennessee Valley Authority
Filing Date: 2025-07-29
Form: 10-Q
Item: Part II, Item 5
Chunk 477
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 TVA entered into a new power purchase agreement ("PPA") totaling $293 million with commitments from 2025 to 2028, of which $23 million is estimated to be paid during the remainder of 2025, and three new long-term service agreements totaling $200 million with commitments from 2025 to 2045, of which less than $1 million is estimated to be paid during the remainder of 2025.

Key Initiatives and Challenges 

There have been no material changes to the key initiatives and challenges described in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges of the Annual Report, except as described below.

Cost Reduction Initiatives

TVA’s demand continues to grow, driving the need for significant capital investments in its power system.  TVA must continue to drive efficiencies and cost savings across the enterprise to provide low-cost, reliable power, while funding the capital investment needed to meet growing demand.  TVA has undertaken a cost optimization initiative designed to reduce planned cost increases by approximately $950 million during the three-year period from 2024 to 2026.  TVA met its reduction target for 2024 and has plans to meet the targets set for 2025 and 2026.  See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges —  Optimum Energy Portfolio in the Annual Report.

This effort has evolved into an Enterprise Transformation Program ("ETP") designed to enable TVA to deliver at least $500 million of sustainable reductions to planned cost increases in 2026 and beyond to support future fleet investments needed to meet growing demand.  TVA's ETP is focused on improving financial health, enhancing asset performance, automating processes, optimizing third-party spend through supply chain, and making the workforce more efficient.  As part of these efforts, certain employees will be eligible for severance payments.  As of June 30, 2025, TVA had accrued $14 million related to estimated future severance payments.  The ETP is ongoing, and any potential future severances costs are uncertain at this time.

Optimum Energy Portfolio

Additional load growth for the foreseeable future is expected, and new capacity will be needed to support this load growth and replace retiring and expiring capacity.  In April of 2025, TVA released a request for proposals for up to 2,250 MW of new build energy resources for