Company: TVC
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001376986-25-000029
Chunk: 224

Company: Tennessee Valley Authority
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 1
Chunk 224
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 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 

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Table of Contents                               Draft 4.0                    04/24/2025 5:00 PM

master purchase and sale agreements.  Customers.  TVA is exposed to counterparty credit risk associated with trade accounts receivable from delivered power sales to local power company customers ("LPCs"), and from industries and federal agencies directly served, all located in the Tennessee Valley region.  Of the $1.6 billion and $1.7 billion of receivables from power sales outstanding at March 31, 2025, and September 30, 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 8 — Other Long-Term Assets.TVA had revenue from two LPCs that collectively accounted for 15 percent of total operating revenues for both the six months ended March 31, 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 similar services or supplies from other vendors, or if there are