----

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|                                                                                                                                      |   |                                              |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
| A corporate agency of the United States created by an act of Congress (State or other jurisdiction of incorporation or organization) |   | 62-0474417 (IRS Employer Identification No.) |
| 400 W. Summit Hill DriveKnoxville, Tennessee (Address of principal executive offices)                                                |   | 37902 (Zip Code)                             |

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| Table of Contents                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                          |   |   |   |
|                                                                                                                          |   |   |   |
| FORWARD-LOOKING INFORMATION                                                                                                   | 5 |   |
| GENERAL INFORMATION                                                                                                           | 6 |   |
|                                                                                                                          |   |   |
| PART I                                                                                                                   |
|                                                                                                                          |   |   |
| ITEM1. BUSINESS                                                                                                               | 7 |   |
| The Corporation                                                                                                               | 7 |   |
| Service Area                                                                                                                  | 7 |   |
| Customers                                                                                                                     | 8 |   |
| Rates                                                                                                                         | 10 |   |
| Current Power Supply                                                                                                          | 12 |   |
| Fuel Supply                                                                                                                   | 18 |   |
| Transmission                                                                                                                  | 20 |   |
| Weather and Seasonality                                                                                                       | 20 |   |
| Competition                                                                                                                   | 21 |   |
| Integrated Resource Plan and Future Power Supply                                                                              | 21 |   |
| Research and Development                                                                                                      | 24 |   |
| Environmental Stewardship Activities                                                                                          | 24 |   |
| Economic Development Activities                                                                                               | 25 |   |
| Governance                                                                                                                    | 25 |   |
| Regulation                                                                                                                    | 25 |   |
| Taxation and Tax Equivalents                                                                                                  | 27 |   |
| Environmental Matters                                                                                                         | 27 |   |
| Employee Relations                                                                                                            | 36 |   |
|                                                                                                                          |   |   |
| ITEM 1A. RISK FACTORS                                                                                                         | 36 |   |
|                                                                                                                          |   |   |
| ITEM 1B. UNRESOLVED STAFF COMMENTS                                                                                            | 44 |   |
|                                                                                                                          |   |   |
| ITEM 2. PROPERTIES                                                                                                            | 44 |   |
| Generating Properties                                                                                                         | 44 |   |
| Transmission Properties                                                                                                       | 44 |   |
| Natural Resource Stewardship Properties                                                                                       | 44 |   |
| Buildings                                                                                                                     | 44 |   |
| Disposal of Property                                                                                                          | 45 |   |
|                                                                                                                          |   |   |
| ITEM 3. LEGAL PROCEEDINGS                                                                                                     | 45 |   |
|                                                                                                                          |   |   |
| ITEM 4. RESERVED                                                                                                              | 45 |   |
|                                                                                                                          |   |   |
| PART II                                                                                                                  |
|                                                                                                                          |   |   |
| ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED TO STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 46 |   |
|                                                                                                                          |   |   |
| ITEM 6. SELECTED FINANCIAL DATA                                                                                               | 46 |   |
|                                                                                                                          |   |   |
| ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                           | 47 |   |
| Business Overview                                                                                                             | 47 |   |
| Executive Summary                                                                                                             | 47 |   |
| 2010 Highlights                                                                                                               | 47 |   |
| 2010 Challenges                                                                                                               | 48 |   |
| Future Challenges                                                                                                             | 50 |   |
| Liquidity and Capital Resources                                                                                               | 52 |   |
| Results of Operations                                                                                                         | 58 |   |
| Off-Balance Sheet Arrangements                                                                                                | 62 |   |
| Critical Accounting Policies and Estimates                                                                                    | 62 |   |
| Changes in Ratemaking Impacting Accounting                                                                                    | 67 |   |
| Fair Value Measurements                                                                                                       | 68 |   |
| New Accounting Standards and Interpretations                                                                                  | 70 |   |
| Legislative and Regulatory Matters                                                                                            | 71 |   |
| Environmental Matters                                                                                                         | 71 |   |
| Legal Proceedings                                                                                                             | 71 |   |
| Risk Management Activities                                                                                                    | 72 |   |
| Subsequent Event                                                                                                              | 76 |   |
|                                                                                                                          |   |   |
| ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                           | 76 |   |
|                                                                                                                          |   |   |
| ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                           | 77 |   |
| Statements of Operations                                                                                                      | 77 |   |
| Balance Sheets                                                                                                                | 78 |   |
| Statements of Cash Flows                                                                                                      | 79 |   |
| Statements of Changes in Proprietary Capital                                                                                  | 80 |   |
| Notes to Financial Statements                                                                                                 | 81 |   |
| Report of Independent Registered Public Accounting Firm                                                                       | 134 |   |
|                                                                                                                          |   |   |
| ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                  | 135 |   |
|                                                                                                                          |   |   |
| ITEM 9A. CONTROLS AND PROCEDURES                                                                                              | 135 |   |
|      Disclosure Controls and Procedures                                                              | 135 |   |
|      Internal Control over Financial Reporting                                                       | 135 |   |
|      Report of Independent Registered Public Accounting Firm                                         | 136 |   |
|                                                                                                                          |   |   |
| ITEM 9B. OTHER INFORMATION                                                                                                    | 137 |   |

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| PART III                                                                                                                        |      |   |   |
|---------------------------------------------------------------------------------------------------------------------------------|-----------|--------|--------|
|                                                                                                                            |      |   |   |
| ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE                                                                | 138       |   |   |
| Directors                                                                                                                       | 138       |   |   |
| Executive Officers                                                                                                              | 139       |   |   |
| Disclosure and Financial Code of Ethics                                                                                         | 141       |   |   |
| Committees of the TVA Board                                                                                                     | 141       |   |   |
|                                                                                                                            |      |   |   |
| ITEM 11. EXECUTIVE COMPENSATION                                                                                                 | 142       |   |   |
| Compensation Discussion and Analysis                                                                                            | 142       |   |   |
| Executive Compensation Tables and Narrative Disclosures                                                                         | 153       |   |   |
| Retirement and Pension Plans                                                                                                    | 158       |   |   |
| Potential Payments on Account of Retirement/Resignation, Termination without Cause, Termination with Cause, or Death/Disability | 161       |   |   |
| Other Agreements                                                                                                                |  164 |   |   |
| Director Compensation                                                                                                           | 164       |   |   |
| Compensation Committee Interlocks and Insider Participation                                                                     | 166       |   |   |
| Compensation Committee Report                                                                                                   | 166       |   |   |
|                                                                                                                            |      |   |   |
| ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                         | 166       |   |   |
|                                                                                                                            |      |   |   |
| ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                              | 166       |   |   |
| Director Independence                                                                                                           | 166       |   |   |
| Related Party Transactions                                                                                                      | 167       |   |   |
|                                                                                                                            |      |   |   |
| ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                 | 168       |   |   |
|                                                                                                                            |      |   |   |
| PART IV                                                                                                                         |      |   |   |
|                                                                                                                            |      |   |   |
| ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                                                | 170       |   |   |
|                                                                                                                            |      |   |   |
| SIGNATURES                                                                                                                      | 175       |   |   |
| EXHIBIT INDEX                                                                                                                   | 177       |   |   |
|                                                                                                                            |

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| GLOSSARY OF COMMON ACRONYMS                                                                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Following are definitions of terms or acronyms frequently used in this Annual Report on Form 10-K for the fiscal year ended September 30, 2010 (the “Annual Report”): |
|                                                                                                                                                                              |
| Term or Acronym                                                                                                                                                                   |   | Definition |
| AFUDC                                                                                                                                                                             |   | Allowance for funds used during construction |
| ARO                                                                                                                                                                               |   | Asset retirement obligation |
| ART                                                                                                                                                                               |   | Asset Retirement Trust |
| ASLB                                                                                                                                                                              |   | Atomic Safety and Licensing Board |
| BEST                                                                                                                                                                              |   | Bellefonte Efficiency and Sustainability Team |
| BREDL                                                                                                                                                                             |   | Blue Ridge Environmental Defense League |
| CAA                                                                                                                                                                               |   | Clean Air Act |
| CAIR                                                                                                                                                                              |   | Clean Air Interstate Rule |
| CCP                                                                                                                                                                               |   | Coal combustion products |
| CERCLA                                                                                                                                                                            |   | Comprehensive Environmental Response, Compensation, and Liability Act |
| CME                                                                                                                                                                               |   | Chicago Mercantile Exchange |
| CO2                                                                                                                                                                               |   | Carbon dioxide |
| COLA                                                                                                                                                                              |   | Cost of living adjustment |
| CVA                                                                                                                                                                               |   | Credit valuation adjustment |
| CY                                                                                                                                                                                |   | Calendar year |
| DOE                                                                                                                                                                               |   | Department of Energy |
| EPA                                                                                                                                                                               |   | Environmental Protection Agency |
| FASB                                                                                                                                                                              |   | Financial Accounting Standards Board |
| FCA                                                                                                                                                                               |   | Fuel cost adjustment |
| FERC                                                                                                                                                                              |   | Federal Energy Regulatory Commission |
| FPA                                                                                                                                                                               |   | Federal Power Act |
| FTP                                                                                                                                                                               |   | Financial Trading Program |
| GAAP                                                                                                                                                                              |   | Accounting principles generally accepted in the United States of America |
| GHGs                                                                                                                                                                              |   | Greenhouse gas |
| GWh                                                                                                                                                                |   | Gigawatt hours(s) |
| kWh                                                                                                                                                                               |   | Kilowatt hour(s) |
| LIBOR                                                                                                                                                                             |   | London Interbank Offered Rate |
| MACT                                                                                                                                                                              |   | Maximum achievable control technology |
| mmBtu                                                                                                                                                                             |   | Million British thermal unit(s) |
| MtM                                                                                                                                                                               |   | Mark-to-market |
| MW                                                                                                                                                                                |   | Megawatt |
| NDT                                                                                                                                                                               |   | Nuclear Decommissioning Trust |
| NEPA                                                                                                                                                                              |   | National Environmental Policy Act |
| NOx                                                                                                                                                                               |   | Nitrogen oxides |
| NRC                                                                                                                                                                               |   | Nuclear Regulatory Commission |
| NSR                                                                                                                                                                               |   | New Source Review |
| PCBs                                                                                                                                                                              |   | Polychlorinated biphenyls |
| REIT                                                                                                                                                                              |   | Real estate investment trust |
| SACE                                                                                                                                                                              |   | Southern Alliance for Clean Energy |
| SCRs                                                                                                                                                                              |   | Selective catalytic reduction systems |
| SEIS                                                                                                                                                                              |   | Supplemental Environmental Impact Statement |
| SERP                                                                                                                                                                              |   | Supplemental executive retirement plan |
| Seven States                                                                                                                                                                      |   | Seven States Power Corporation |
| SO2                                                                                                                                                                               |   | Sulfur dioxide |
| SSSL                                                                                                                                                                              |   | Seven States Southaven, LLC |
| TDEC                                                                                                                                                                              |   | Tennessee Department of Environment and Conservation |
| TVARS                                                                                                                                                                             |   | Tennessee Valley Authority Retirement System |
|                                                                                                                                                                              |   |   |

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Table of Contents

FORWARD-LOOKING INFORMATION

|   | • | New or changed laws, regulations, and administrative orders, including those related to environmental matters, and the costs of complying with these new or changed laws, regulations, and administrative orders, as well as complying with existing laws, regulations, and administrative orders; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The requirement or decision to make additional contributions to TVA’s pension or other post-retirement benefit plans or to TVA’s nuclear decommissioning trust (“NDT”); |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Significant delays, cost increases, or cost overruns associated with the construction of generation or transmission assets or the cleanup and recovery activities associated with the ash spill at TVA’s Kingston Fossil Plant (“Kingston”); |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Fines, penalties, natural resource damages, and settlements associated with the Kingston ash spill; |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | The outcome of legal and administrative proceedings, including, but not limited to, proceedings involving the Kingston ash spill and the North Carolina public nuisance case; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Significant changes in demand for electricity; |
|--------|---------|------------------------------------------------|

|   | • | Addition or loss of customers; |
|--------|---------|--------------------------------|

|   | • | The continued operation, performance, or failure of TVA’s generation, transmission, and related assets, including coal combustion product (“CCP”) facilities; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The economics of modernizing aging coal-fired generating units and installing emission control equipment to meet anticipated emission reduction requirements, which could make continued operation of certain coal-fired units uneconomical and lead to their removal from service, perhaps permanently; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Disruption of fuel supplies, which may result from, among other things, weather conditions, production or transportation difficulties, labor challenges, or environmental laws or regulations affecting TVA’s fuel suppliers or transporters; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Purchased power price volatility and disruption of purchased power supplies; |
|--------|---------|------------------------------------------------------------------------------|

|   | • | Events involving transmission lines, dams, and other facilities not operated by TVA, including those that affect the reliability of the interstate transmission grid of which TVA’s transmission system is a part as well as the supply of water to TVA’s generation facilities; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Inability to obtain regulatory approval for the construction or operation of assets; |
|--------|---------|--------------------------------------------------------------------------------------|

|   | • | Weather conditions; |
|--------|---------|---------------------|

|   | • | Events at a nuclear facility, even one that is not operated by or licensed to TVA; |
|--------|---------|------------------------------------------------------------------------------------|

|   | • | Catastrophic events such as fires, earthquakes, solar events, floods, tornadoes, pandemics, wars, national emergencies, terrorist activities, and other similar events, especially if these events occur in or near TVA’s service area; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Reliability and creditworthiness of counterparties; |
|--------|---------|-----------------------------------------------------|

|   | • | Changes in the market price of commodities such as coal, uranium, natural gas, fuel oil, crude oil, construction materials, electricity, and emission allowances; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Changes in the market price of equity securities, debt securities, and other investments; |
|--------|---------|-------------------------------------------------------------------------------------------|

|   | • | Changes in interest rates, currency exchange rates, and inflation rates; |
|--------|---------|--------------------------------------------------------------------------|

|   | • | Increases in TVA’s financial liability for decommissioning its nuclear facilities and retiring other assets; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------|

|   | • | Changes in the market for TVA’s debt, changes in TVA’s debt ceiling, changes in TVA’s credit rating, or limitations on TVA’s ability to borrow money which may result from, among other things, TVA’s approaching or reaching its debt ceiling; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Changes in the economy and volatility in financial markets; |
|--------|---------|-------------------------------------------------------------|

|   | • | Inability to eliminate identified deficiencies in TVA’s systems, standards, controls, and corporate culture; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------|

|   | • | Ineffectiveness of TVA’s disclosure controls and procedures and its internal control over financial reporting; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | • | Problems attracting and retaining a qualified workforce; |
|--------|---------|----------------------------------------------------------|

|   | • | Changes in technology; |
|--------|---------|------------------------|

|   | • | Failure of TVA’s information technology assets to operate as planned; |
|--------|---------|-----------------------------------------------------------------------------|

|   | • | Differences between estimates of revenues and expenses and actual revenues and expenses incurred; and |
|--------|---------|-------------------------------------------------------------------------------------------------------|

|   | • | Unforeseeable events. |
|--------|---------|-----------------------|

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Table of Contents

GENERAL INFORMATION

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Table of Contents

PART I

ITEM 1.  BUSINESS

The Corporation

Service Area

| Operating RevenuesFor the years ended September 30(in millions)  |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Electricity sales by state                                            |   |   |   |   |   |   |   |   |   |   |
|     Alabama                                       |   |   | $ | 1,495 |   |   | $ | 1,526 |   |   | $ | 1,410 |   |
|     Georgia                                       |   |   |   | 253 |   |   |   | 264 |   |   |   | 238 |   |
|     Kentucky                                      |   |   |   | 1,195 |   |   |   | 1,252 |   |   |   | 1,192 |   |
|     Mississippi                                   |   |   |   | 974 |   |   |   | 1,017 |   |   |   | 923 |   |
|     North Carolina                                |   |   |   | 53 |   |   |   | 58 |   |   |   | 50 |   |
|     Tennessee                                     |   |   |   | 6,693 |   |   |   | 6,970 |   |   |   | 6,389 |   |
|     Virginia                                      |   |   |   | 48 |   |   |   | 51 |   |   |   | 37 |   |
|       Subtotal                          |   |   |   | 10,711 |   |   |   | 11,138 |   |   |   | 10,239 |   |
| Sale for resale and other                                             |   |   |   | 2 |   |   |   | 4 |   |   |   | 13 |   |
|      Subtotal                                |   |   |   | 10,713 |   |   |   | 11,142 |   |   |   | 10,252 |   |
| Other revenues                                                        |   |   |   | 161 |   |   |   | 113 |   |   |   | 130 |   |
|      Operating revenues                      |   |   | $ | 10,874 |   |   | $ | 11,255 |   |   | $ | 10,382 |   |

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Table of Contents

Customers

| Operating Revenues by Customer TypeFor the years ended September 30(in millions) |   |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Municipalities and cooperatives                                                  |   |   | $ | 9,275 |   |   | $ | 9,644 |   |   | $ | 8,659 |   |
| Industries directly served                                                       |   |   |   | 1,321 |   |   |   | 1,367 |   |   |   | 1,472 |   |
| Federal agencies and other                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Federal agencies directly served                               |   |   |   | 115 |   |   |   | 127 |   |   |   | 108 |   |
|    Off-system sales and other                                     |   |   |   | 2 |   |   |   | 4 |   |   |   | 13 |   |
|   Subtotal                                                                  |   |   |   | 10,713 |   |   |   | 11,142 |   |   |   | 10,252 |   |
| Other revenues                                                                   |   |   |   | 161 |   |   |   | 113 |   |   |   | 130 |   |
|   Operating revenues                                                   |   |   | $ | 10,874 |   |   | $ | 11,255 |   |   | $ | 10,382 |   |

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Table of Contents

|   | • | Contracts that require five years’ notice to terminate; |
|--------|---------|---------------------------------------------------------------|

|   | • | Contracts that require 10 years’ notice to terminate; and |
|--------|---------|-----------------------------------------------------------------|

|   | • | Contracts that require 15 years’ notice to terminate. |
|--------|---------|-------------------------------------------------------------|

| TVA Distributor Customer ContractsAs of September 30, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Contract Arrangements(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | Number of Distributor Customers |   |   | Sales to DistributorCustomers in 2010 |   |   | Percentage of Total Operating Revenues in 2010 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | (in millions) |   |
| 15-year termination notice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 5 |   |   | $ | 102 |   |   |   | 0.9 | % |
| 10-year termination notice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 47 |   |   |   | 3,078 |   |   |   | 28.4 | % |
| 5-year termination notice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 103 |   |   |   | 6,084 |   |   |   | 55.6 | % |
|      Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 155 |   |   | $ | 9,264 | (2) |   |   | 84.9 | % |
|  Notes(1)  Ordinarily the distributor customer and TVA have the same termination notice period; however, in contracts with six of the distributor customers with five-year termination notices, TVA has a 10-year termination notice (which becomes a five-year termination notice if TVA loses its discretionary wholesale rate-setting authority). Also, under TVA’s contract with Bristol Virginia Utilities, a five-year termination notice may not be given until January 2018.(2)  Sales to distributor customers in 2010 for contracts terminated during the year totaled an additional $11million.  |   |

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Table of Contents

Rates

|   | • | Operation, maintenance, and administration of its power system; |
|--------|---------|-----------------------------------------------------------------|

|   | • | Payments to states and counties in lieu of taxes (“tax equivalents”); |
|--------|---------|-----------------------------------------------------------------------------------|

|   | • | Debt service on outstanding indebtedness; |
|--------|---------|-------------------------------------------|

|   | • | Payments to the U.S. Treasury in repayment of and as a return on the government’s appropriation investment in TVA’s power facilities (the “Power Program Appropriation Investment”); and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Such additional margin as the TVA Board may consider desirable for investment in power system assets, retirement of outstanding bonds, notes, or other evidences of indebtedness (“Bonds”) in advance of maturity, additional reduction of the Power Program Appropriation Investment, and other purposes connected with TVA’s power business. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Fuel and purchased power costs; |
|--------|---------|---------------------------------|

|   | • | Operating and maintenance costs; |
|--------|---------|----------------------------------|

|   | • | Tax equivalents; and |
|--------|---------|----------------------|

|   | • | Debt service coverage. |
|--------|---------|------------------------|

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Table of Contents

|     Month               |     FCA (¢/kWh) |   Impact of FCA Changes from Prior Month  Total Rate |
|---------------------------------------------|------------------------------------------|---------------------------------------------------------------------|
|                                        |                                     |                                                                |
|  October 2009                          |  (0.210)                            |  (11.0%)                                                       |
| November 2009                               | (0.309)                                  | (1.5%)                                                              |
| December 2009                               | (0.662)                                  | (5.5%)                                                              |
| January 2010                                | (0.799)                                  | (2.3%)                                                              |
| February 2010                               | (0.861)                                  | (1.1%)                                                              |
| March 2010                                  | (0.552)                                  | 5.3%                                                                |
| April 2010                                  | (0.193)                                  | 5.9%                                                                |
| May 2010                                    | (0.131)                                  | 1.0%                                                                |
| June 2010                                   | 0.198                                    | 5.0%                                                                |
| July 2010                                   | 0.403                                    | 3.0%                                                                |
| August 2010                                 | 0.508                                    | 1.5%                                                                |
| September 2010                              | 0.659                                    | 2.1%                                                                |
| October 2010                           | 1.127                                    | 6.4%                                                                |
| November 2010                               |  0.735                              | (5.0%)                                                              |
| December 2010      |  0.476                              | (3.5%)                                                         |

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Table of Contents

Current Power Supply

| Power Supply from TVA-Operated Generation FacilitiesFor the years ended September 30(millions of kWh)  |   |
|-------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                        |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coal-fired                                                                                                  |   |   | 74,590 |   |   |   | 51 | % |   |   | 76,794 |   |   |   | 53 | % |   |   | 98,752 |   |   |   | 62 | % |   |   | 100,169 |   |   |   | 64 | % |   |   | 99,598 |   |   |   | 64 | % |
| Nuclear                                                                                                     |   |   | 53,339 |   |   |   | 36 | % |   |   | 53,047 |   |   |   | 37 | % |   |   | 51,371 |   |   |   | 33 | % |   |   | 46,441 |   |   |   | 30 | % |   |   | 45,313 |   |   |   | 29 | % |
| Hydroelectric                                                                                               |   |   | 14,013 |   |   |   | 9 | % |   |   | 11,421 |   |   |   | 8 | % |   |   | 6,685 |   |   |   | 4 | % |   |   | 9,047 |   |   |   | 6 | % |   |   | 9,961 |   |   |   | 6 | % |
| Natural gas and/or oil-fired                                                                                |   |   | 5,475 |   |   |   | 4 | % |   |   | 3,481 |   |   |   | 2 | % |   |   | 1,386 |   |   |   | 1 | % |   |   | 705 |   |   | <1 |  % |   |   | 613 |   |   | <1 |  % |
| Renewable resources (non-hydro)                                                                             |   |   | 4 |   |   | <1 |  % |   |   | 29 |   |   | <1 |  % |   |   | 39 |   |   | <1 |  % |   |   | 27 |   |   | <1 |  % |   |   | 36 |   |   | <1 |  % |
|  Total                                                                                                 |   |   | 147,421 |   |   |   | 100 | % |   |   | 144,772 |   |   |   | 100 | % |   |   | 158,233 |   |   |   | 100 | % |   |   | 156,389 |   |   |   | 100 | % |   |   | 155,521 |   |   |   | 100 | % |
|                                                                                                        |   |

| NoteOperation and maintenance issues reduced the available renewable generation during 2010 from several facilities, including those utilizing methane, solar, and wind.  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| SUMMER NET CAPABILITY(1)As of September 30, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
|  Source of Capability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  Location |   | Number of Units |   |   | Summer Net Capability (MW) |   |   | Date First Unit Placed in Service |   |   | Date Last Unit Placed in Service |   |
| TVA-OPERATED GENERATING FACILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |           |   |   |   |   |   |   |   |   |   |   |   |
| Coal-Fired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |           |   |   |   |   |   |   |   |   |   |   |   |   |
|     Allen                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Tennessee      |   |   | 3 |   |   |   | 741 |   |   |   | 1959 |   |   |   | 1959 |   |
|     Bull Run                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Tennessee      |   |   | 1 |   |   |   | 870 |   |   |   | 1967 |   |   |   | 1967 |   |
|     Colbert                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Alabama        |   |   | 5 |   |   |   | 1,184 |   |   |   | 1955 |   |   |   | 1965 |   |
|     Cumberland                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Tennessee      |   |   | 2 |   |   |   | 2,470 |   |   |   | 1973 |   |   |   | 1973 |   |
|     Gallatin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Tennessee      |   |   | 4 |   |   |   | 976 |   |   |   | 1956 |   |   |   | 1959 |   |
|     John Sevier                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Tennessee      |   |   | 4 |   |   |   | 704 |   |   |   | 1955 |   |   |   | 1957 |   |
|     Johnsonville                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Tennessee      |   |   | 10 |   |   |   | 1,206 |   |   |   | 1951 |   |   |   | 1959 |   |
|     Kingston                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Tennessee      |   |   | 9 |   |   |   | 1,398 |   |   |   | 1954 |   |   |   | 1955 |   |
|     Paradise                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Kentucky       |   |   | 3 |   |   |   | 2,201 |   |   |   | 1963 |   |   |   | 1970 |   |
|     Shawnee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Kentucky       |   |   | 10 |   |   |   | 1,330 |   |   |   | 1953 |   |   |   | 1956 |   |
|     Widows Creek(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Alabama        |   |   | 7 |   |   |   | 1,493 |   |   |   | 1952 |   |   |   | 1965 |   |
| Total Coal-Fired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |           |   |   | 58 |   |   |   | 14,573 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Browns Ferry                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Alabama        |   |   | 3 |   |   |   | 3,242 |   |   |   | 1974 |   |   |   | 1977 |   |
|     Sequoyah                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Tennessee      |   |   | 2 |   |   |   | 2,282 |   |   |   | 1981 |   |   |   | 1982 |   |
|     Watts Bar                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Tennessee      |   |   | 1 |   |   |   | 1,108 |   |   |   | 1996 |   |   |   | 1996 |   |
| Total Nuclear                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |           |   |   | 6 |   |   |   | 6,632 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hydroelectric                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Conventional Plants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Alabama        |   |   | 36 |   |   |   | 1,188 |   |   |   | 1925 |   |   |   | 1962 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Georgia        |   |   | 2 |   |   |   | 35 |   |   |   | 1931 |   |   |   | 1956 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Kentucky       |   |   | 5 |   |   |   | 225 |   |   |   | 1944 |   |   |   | 1948 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | North Carolina |   |   | 6 |   |   |   | 491 |   |   |   | 1940 |   |   |   | 1956 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Tennessee      |   |   | 60 |   |   |   | 1,898 |   |   |   | 1912 |   |   |   | 1972 |   |
|     Pumped Storage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Tennessee      |   |   | 4 |   |   |   | 1,653 |   |   |   | 1978 |   |   |   | 1979 |   |
| Total Hydroelectric                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |           |   |   | 113 |   |   |   | 5,490 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Natural Gas and/or Oil-Fired(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Allen                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Tennessee      |   |   | 20 |   |   |   | 456 |   |   |   | 1971 |   |   |   | 1972 |   |
|     Brownsville                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Tennessee      |   |   | 4 |   |   |   | 474 |   |   |   | 2008 |   |   |   | 2008 |   |
|     Caledonia                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Mississippi    |   |   | 3 |   |   |   | 766 |   |   |   | 2007 |   |   |   | 2007 |   |
|     Colbert                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Alabama        |   |   | 8 |   |   |   | 392 |   |   |   | 1972 |   |   |   | 1972 |   |
|     Gallatin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Tennessee      |   |   | 8 |   |   |   | 600 |   |   |   | 1975 |   |   |   | 2000 |   |
|     Gleason                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Tennessee      |   |   | 3 |   |   |   | 360 |   |   |   | 2007 |   |   |   | 2007 |   |
|     Johnsonville                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Tennessee      |   |   | 20 |   |   |   | 1,128 |   |   |   | 1975 |   |   |   | 2000 |   |
|     Kemper                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Mississippi    |   |   | 4 |   |   |   | 312 |   |   |   | 2001 |   |   |   | 2001 |   |
|     Lagoon Creek                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Tennessee      |   |   | 13 |   |   |   | 1,480 |   |   |   | 2002 |   |   |   | 2010 |   |
|     Marshall County                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Kentucky       |   |   | 8 |   |   |   | 616 |   |   |   | 2007 |   |   |   | 2007 |   |
|     Southaven                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Mississippi    |   |   | 3 |   |   |   | 774 |   |   |   | 2008 |   |   |   | 2008 |   |
| Total Natural Gas and/or Oil-Fired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |   |   | 94 |   |   |   | 7,358 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diesel Generator                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Meridian                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Mississippi    |   |   | 5 |   |   |   | 9 |   |   |   | 1998 |   |   |   | 1998 |   |
|     Albertville                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Alabama        |   |   | 4 |   |   |   | 4 |   |   |   | 2000 |   |   |   | 2000 |   |
| Total Diesel Generators                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |           |   |   | 9 |   |   |   | 13 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TVA Renewable Resources (non-hydro)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |           |   |   |   |   |   |   | 2 |   |   |   |   |   |   |   |   |   |
|  Total TVA-Operated Generating Facilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |           |   |   |   |   |   |   | 34,068 |   |   |   |   |   |   |   |   |   |
|  Contract Renewable Resources (non-hydro)(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |           |   |   |   |   |   |   | 19 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Power Purchase and Other Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |           |   |   |   |   |   |   | 3,101 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Summer Net Capability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |           |   |   |   |   |   |   | 37,188 |   |   |   |   |   |   |   |   |   |
|  Notes(1)  Net capability is defined as the ability of an electric system, generating unit, or other system component to carry or generate power for a specified time period.(2)  Widows Creek Unit 5 was idled on September 12, 2010. See Item 1, Business – Integrated Resource Plan and Future Power Supply – for other units idled subsequent to September 30, 2010.(3)  See Item 1, Business — Current Power Supply – Natural Gas and/or Oil-Fired Facilities— for a discussion of TVA-operated natural gas and/or oil- fired facilities.(4)  Contract Renewable Resources (non-hydro) include wind and landfill gas contracts. |           |

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| TVA Nuclear PowerAs of September 30, 2010 |                                  |
|-------------------------------------------|---------------------------------------|
|   Nuclear Unit                  |   Status                    |   |   | Installed Capacity (MW) |   |   | Net CapacityFactor for2010 |   |   | Date of Expirationof OperatingLicense |   |   | Date of Expirationof Construction Permit |   |
|                                      |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sequoyah Unit 1                           | Operating                             |   |   |   | 1,221 |   |   |   | 97.9 |   |   |   | 2020 |   |   |   | — |   |
| Sequoyah Unit 2                           | Operating                             |   |   |   | 1,221 |   |   |   | 85.5 |   |   |   | 2021 |   |   |   | — |   |
| Browns Ferry Unit 1                       | Operating                             |   |   |   | 1,150 |   |   |   | 92.6 |   |   |   | 2033 |   |   |   | — |   |
| Browns Ferry Unit 2                       | Operating                             |   |   |   | 1,190 |   |   |   | 87.9 |   |   |   | 2034 |   |   |   | — |   |
| Browns Ferry Unit 3                       | Operating                             |   |   |   | 1,190 |   |   |   | 79.1 |   |   |   | 2036 |   |   |   | — |   |
| Watts Bar Unit 1                          | Operating                             |   |   |   | 1,230 |   |   |   | 91.1 |   |   |   | 2035 |   |   |   | — |   |
| Watts Bar Unit 2                          | Construction resumed in December 2007 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2013 |   |

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|   | • | TVA has contracted for 720 MW of summer net capability from a natural gas-fired generating plant located at Decatur, Alabama.  This contract expires on August 31, 2012. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | TVA has contracted for 500 MW of summer net capability from a natural gas-fired generating plant located in Morgan County, Alabama.  This contract expires on December 31, 2011. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | TVA has contracted for 690 MW of summer net capability from a natural gas-fired generating plant located near Ackerman, Mississippi.  The contract expires on December 31, 2012. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | TVA has contracted for 440 MW of summer net capability from a lignite-fired generating plant in Chester, Mississippi.  The contract expires on March 31, 2032.  See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Risk Management Activities — Credit Risk. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Four hydroelectric plants owned by a third party are operated in coordination with the TVA system.  Under contractual arrangements which terminate on June 30, 2011, TVA currently purchases and dispatches all electricity generated at these facilities and uses the power to supply the owner’s energy needs.  TVA may be the net purchaser or net supplier under these arrangements. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | TVA has contracted for 27 MW of wind energy generation from 15 wind turbine generators located on Buffalo Mountain near Oak Ridge, Tennessee.  Because of the nature of intermittent wind conditions in the TVA service area, these generators provide energy benefits but are not included in TVA’s summer net capability total.  The contract expires on December 31, 2024. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | TVA has contracted for 300 MW of wind energy generation from 150 wind turbine generators located in Livingston County, Illinois.  Deliveries under this contract began May 11, 2010.  Because of the nature of intermittent wind conditions in that area, these generators provide energy benefits but contribute only 35 MW of summer net capability.  The contract expires on May 10, 2030. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | TVA has contracted for 115 MW of wind energy generation from 70 wind turbine generators located in Howard and Mitchell Counties, Iowa.  Deliveries under this contract began September10, 2010.  Because of the nature of intermittent wind conditions in that area, these generators provide energy benefits but contribute only 13 MW of summer net capability.  The contract expires on September 9, 2030. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Like TVA, the Southeastern Power Administration (“SEPA”) is a federal agency and is therefore a related party.  SEPA contracts with other utilities to provide transmission services for federal power.  Preference in the sale of power is given to public bodies and cooperatives.  TVA, along with others, has contracted with SEPA to obtain power from eight U.S. Army Corps of Engineers hydroelectric facilities on the Cumberland River system.  The agreement with SEPA can be terminated upon three years’ notice, but this notice of termination may not become effective prior to June 30, 2017.  The contract requires SEPA to provide TVA an annual minimum of 1,500 hours of power for each megawatt of TVA’s 405 MW allocation, and all surplus power from the Cumberland River system.  Because hydroelectric production has been reduced at two of the hydroelectric facilities on the Cumberland River system due to repair work being performed by U.S. Army Corps of Engineers at those facilities and because of reductions in the summer stream flow on the Cumberland River, SEPA declared “force majeure” on February 25, 2007.  SEPA then instituted an emergency operating plan that, among other things, eliminates SEPA’s obligation to provide TVA and other affected customers with a minimum amount of power.  It is unclear how long the emergency operating plan will remain in effect. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Purchased Power*For the years ended September 30                                                                                                                                                                                                                       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                        |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Millions of kWh                                                                                                                                                                                                                                                             |   |   |   | 28,782 |   |   |   | 22,088 |   |   |   | 20,887 |   |   |   | 22,141 |   |   |   | 19,019 |   |
| Percent of TVA’s Total Power Supply                                                                                                                                                                                                                                   |   |   |   | 16.3 | % |   |   | 13.1 | % |   |   | 11.6 | % |   |   | 12.4 | % |   |   | 10.9 | % |
|  Note* Purchased power amounts for 2006 have been adjusted to remove third-party purchases and include them as a credit to powersales. Purchased power amounts include generation from Caledonia, which is currently a leased facility operated by TVA. |   |

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Fuel Supply

| Fuel for TVA-Operated Facilities*For the years ended September 30(in millions)      |   |
|------------------------------------------------------------------------------------------|--------|
|                                                                                     |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coal                                                                                     |   | $ | 2,126 |   |   | $ | 2,127 |   |   | $ | 2,242 |   |   | $ | 2,074 |   |   | $ | 1,996 |   |
| Natural gas                                                                              |   |   | 236 |   |   |   | 129 |   |   |   | 131 |   |   |   | 63 |   |   |   | 60 |   |
| Fuel oil                                                                                 |   |   | 38 |   |   |   | 38 |   |   |   | 45 |   |   |   | 26 |   |   |   | 27 |   |
| Nuclear fuel                                                                             |   |   | 277 |   |   |   | 267 |   |   |   | 256 |   |   |   | 180 |   |   |   | 173 |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Total fuel                                                             |   | $ | 2,677 |   |   | $ | 2,561 |   |   | $ | 2,674 |   |   | $ | 2,343 |   |   | $ | 2,256 |   |
|                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Note* Excludes affects of the FCA deferrals and amortization on fuel expense. |   |

| Fuel Expense Per kWh*For the years ended September 30(cents/kWh)                          |   |
|------------------------------------------------------------------------------------------------|--------|
|                                                                                           |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Coal                                                                                           |   |   |   | 2.90 |   |   |   | 2.81 |   |   |   | 2.31 |   |   |   | 2.09 |   |   |   | 2.02 |   |
| Natural gas and fuel oil                                                                       |   |   |   | 4.37 |   |   |   | 3.77 |   |   |   | 9.73 |   |   |   | 9.62 |   |   |   | 10.65 |   |
| Nuclear                                                                                        |   |   |   | 0.52 |   |   |   | 0.50 |   |   |   | 0.50 |   |   |   | 0.39 |   |   |   | 0.38 |   |
| Average fuel cost per kWh net thermal     generation from all sources |   |   |   | 2.01 |   |   |   | 1.92 |   |   |   | 1.76 |   |   |   | 1.59 |   |   |   | 1.54 |   |
|  Note* Excludes affects of the FCA deferrals and amortization.                  |   |

| Natural Gas Purchases for Tolling PlantsFor the years ended September 30  |   |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of fuel (in millions)                                                     |   |   | $ | 381 |   |   | $ | 255 |   |   | $ | 457 |   |   | $ | 430 |   |   | $ | 288 |   |
| Average fuel expense (cents/kWh)                                               |   |   |   | 5.93 |   |   |   | 6.54 |   |   |   | 12.26 |   |   |   | 5.51 |   |   |   | 6.07 |   |

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|   | • | 43 percent from the Illinois Basin; |
|--------|---------|-------------------------------------|

|   | • | 28 percent from the Powder River Basin in Wyoming; |
|--------|---------|----------------------------------------------------|

|   | • | 20 percent from the Uinta Basin of Utah and Colorado; and |
|--------|---------|-----------------------------------------------------------|

|   | • | 9 percent from the Appalachian Basin of Kentucky, Pennsylvania, Tennessee, Virginia, and West Virginia. |
|--------|---------|---------------------------------------------------------------------------------------------------------|

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Transmission

|   | • | Approximately 15,940 circuit miles of transmission lines (primarily 500 kilovolt and 161 kilovolt lines); |
|--------|---------|-----------------------------------------------------------------------------------------------------------|

|   | • | 498 transmission substations, power switchyards, and switching stations; and |
|--------|---------|------------------------------------------------------------------------------|

|   | • | 1,240 connection points (customer, generation, and interconnection). |
|--------|---------|----------------------------------------------------------------------|

Weather and Seasonality

|                                |   2010  | Percent Change |   2009  |  Percent Change |   2008  |
|-------------------------------------|-------------------|----------------|-------------------|----------------------|-------------------|
|                                |              |           |              |                 |              |
| Combined degree days (normal 5,267) | 6,057             | 15.8%          | 5,232             | 2.6%                 | 5,099             |

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Competition

Integrated Resource Plan and Future Power Supply

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Research and Development

| •   | Evaluation of technologies and development of a utility plan for the integration of electric vehicles onto the distribution and transmission system, including:  developing technologies to make electric vehicles and the charging stations that fuel them work together efficiently, dealing with demands on the power grid caused by charging stations, finding ways to minimize demands on the power grid, including solar-assisted charging stations and distributed energy storage, and refining existing processes for power system control to maximize energy efficiency and take full advantage of the environmental benefits of electric transportation; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •   | Development of smart grid infrastructure for both transmission and distribution systems; |
|---------------------|------------------------------------------------------------------------------------------|

| •   | Development and testing of infrastructure and technologies to enable consumer awareness and access to demand response and energy efficiency tools; |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Evaluation, demonstration, and implementation of clean and renewable energy technologies that reduce TVA’s environmental footprint, including participation in technology evaluations for carbon capture and sequestration; |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Evaluation, demonstration, and implementation of technologies that improve the operational efficiency and extend asset life of our generation fleet (fossil, nuclear, and hydro). |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Environmental Stewardship Activities

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Economic Development Activities

Governance

Regulation

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|   | • | Under section 210 of the FPA, TVA can be ordered to interconnect its transmission facilities with the electrical facilities of qualified generators and other electric utilities that meet certain requirements.  It must be found that the requested interconnection is in the public interest and would encourage conservation of energy or capital, optimize efficiency of facilities or resources, or improve reliability.  The requirements of section 212 concerning the terms and conditions of interconnection, including reimbursement of costs, must also be met. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Under section 211 of the FPA, TVA can be ordered to transmit power at wholesale provided that the order does not impair the reliability of the TVA or surrounding systems and likewise meets the applicable requirements of section 212 concerning terms, conditions, and rates for service.  Under section 211A of the FPA, TVA is subject to FERC review of the transmission rates and the terms and conditions of service that TVA provides others to ensure comparability of treatment of such service with TVA’s own use of its transmission system and that the terms and conditions of service are not unduly discriminatory or preferential.  The anti-cherrypicking provision of the FPA precludes TVA from being ordered to wheel another supplier’s power to a customer if the power would be consumed within TVA’s defined service territory. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Sections 221 and 222 of the FPA, applicable to all market participants, including TVA, prohibit (i) using manipulative or deceptive devices or contrivances in connection with the purchase or sale of power or transmission services subject to FERC’s jurisdiction and (ii) reporting false information on the price of electricity sold at wholesale or the availability of transmission capacity to a federal agency with intent to fraudulently affect the data being compiled by the agency. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Under section 215 of the FPA, TVA must comply with certain standards designed to maintain transmission system reliability.  These standards are approved by FERC and enforced by the Electric Reliability Organization. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Section 206(e) of the FPA provides FERC with authority to order refunds of excessive prices on short-term sales (transactions lasting 31 days or less) by all market participants, including TVA, in market manipulation and price gouging situations if such sales are under a FERC-approved tariff. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Section 220 of the FPA provides FERC with authority to issue regulations requiring the reporting, on a timely basis, of information about the availability and prices of wholesale power and transmission service by all market participants, including TVA. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Under sections 306 and 307 of the FPA, FERC may investigate electric industry practices, including TVA’s operations previously mentioned that are subject to FERC’s jurisdiction. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Under sections 316 and 316A of the FPA, FERC has authority to impose civil penalties of up to $1 million a day for each violation on entities subject to the provisions of Part II of the FPA, which includes the above provisions applicable to TVA.  Criminal penalties may also result from such violations. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Taxation and Tax Equivalents

Environmental Matters

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| •   | On June 26, 2009, the U.S. House of Representatives passed H.R. 2454, the American Clean Energy and Security Act of 2009.  This bill, if enacted, would impose a cap on emissions of GHGs from covered sources, including TVA, of three percent, 17 percent, 40 percent, and 83 percent below CY 2005 emission levels by CY 2012, CY 2020, CY 2030, and CY 2050, respectively. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | On November 5, 2009, the U.S. Senate’s Environmental & Public Works Committee passed S.1733, the Clean Energy Jobs and American Power Act.  The GHG cap-and-trade provisions in this bill are slightly more stringent than those in H.R. 2454. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | On October 30, 2009, EPA published the final rule for mandatory monitoring and annual reporting of GHG emissions from various categories of facilities, including fossil fuel suppliers, industrial gas suppliers, direct GHG emitters (such as electric generating facilities), and manufacturers of heavy-duty and off-road vehicles and engines.  This rule does not require controls or limits on emissions, but requires data collection beginning January 1, 2010, with the first annual reports due on March 31, 2011.  The requirements for monitoring, reporting, and record keeping with respect to GHG emissions from existing units should not have a material impact on TVA. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   TVA Air, Water, and Waste Quality Estimated Potential Environmental ExpendituresAs of September 30, 2010(in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Estimated Timetable |   | Total Estimated Expenditures |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
| Site environmental remediation costs(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 2011+ |   | $        23 |
| CCP conversion and remediation(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 2011-2020 |   | $   1,553 |
| Proposed clean air projects(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2011-2018 |   | $   3,779 |
| Clean Water Act requirements(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2015-2020 |   |        TBD* |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |
| Notes(1)  Estimated liability for cleanup and similar environmental work for those sites for which sufficient information is available to develop a cost estimate.(2)  Includes closure of impoundments, construction of lined landfills, and construction of dewatering systems.(3)  Includes air quality projects that TVA is currently planning to undertake to comply with existing and proposed air quality regulations, but does not include any projects that may be required to comply with potential GHG regulations.(4)  Compliance plans to meet the requirements of a revised or new implementing rule under Section 316(b) of the Clean Water Act and the EPA’s decision to revise the steam electric effluent guidelines will be determined upon finalization of the rules.*  TBD – to be determined as regulations become final |

Employee Relations

ITEM 1A.  RISK FACTORS

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| •   | Provisions of the pension plan; |
|---------------------|---------------------------------|

| •   | Changing employee demographics; |
|---------------------|---------------------------------|

| •   | Rates of increase in compensation levels; |
|---------------------|-------------------------------------------|

| •   | Rates of return on plan assets; |
|---------------------|---------------------------------|

| •   | Discount rates used in determining future benefit obligations and required funding levels; |
|---------------------|--------------------------------------------------------------------------------------------|

| •   | Future government regulation; and |
|---------------------|-----------------------------------|

| •   | Level of contributions made to the plan. |
|---------------------|------------------------------------------|

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| •   | The value of the investments in the trust declines significantly, as it did during the recent financial crisis, or the investments fail to achieve the assumed real rate of return; |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | The decommissioning funding requirements are changed by law or regulation; |
|---------------------|----------------------------------------------------------------------------|

| •   | The assumed real rate of return on plan assets, which is currently 5 percent, is lowered by the TVA Board or is optimistic; |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------|

| •   | The actual costs of decommissioning are more than planned; |
|---------------------|------------------------------------------------------------|

| •   | Changes in technology and experience related to decommissioning cause decommissioning cost estimates to increase significantly; or |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------|

| •   | TVA is required to decommission a nuclear plant sooner than it anticipates. |
|---------------------|-----------------------------------------------------------------------------|

| •   | May have to invest a significant amount of resources to repair or replace the assets or the supporting infrastructure; |
|---------------------|------------------------------------------------------------------------------------------------------------------------|

| •   | May be unable to operate the assets for a significant period of time; |
|---------------------|-----------------------------------------------------------------------|

| •   | May have to purchase replacement power on the open market; |
|---------------------|------------------------------------------------------------|

| •   | May not be able to meet its contractual obligations to deliver power; |
|---------------------|-----------------------------------------------------------------------|

| •   | May have to remediate collateral damage caused by a failure of the assets or the supporting infrastructure; and |
|---------------------|-----------------------------------------------------------------------------------------------------------------|

| •   | May have to increase its efforts to reduce vegetation intrusions onto transmission lines to comply with applicable regulations. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------|

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| •   | A downgrade would increase TVA’s interest expense by increasing the interest rates that TVA pays on new Bonds that it issues.  An increase in TVA’s interest expense may reduce the amount of cash available for other purposes, which may result in the need to increase borrowings, to reduce other expenses or capital investments, or to increase power rates. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | A downgrade may result in TVA’s having to post collateral under certain physical and financial contracts that contain rating triggers. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| •   | A downgrade below a contractual threshold may prevent TVA from borrowing under two credit facilities totaling $2.0 billion. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------|

| •   | A downgrade may lower the price of TVA’s securities in the secondary market. |
|---------------------|------------------------------------------------------------------------------------|

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ITEM 1B.  UNRESOLVED STAFF COMMENTS

ITEM 2.  PROPERTIES

Generating Properties

Transmission Properties

|   | • | Approximately 15,940 circuit miles of transmission lines (primarily 500 kilovolt and 161 kilovolt lines); |
|--------|---------|-----------------------------------------------------------------------------------------------------------|

|   | • | 498 transmission substations, power switchyards, and switching stations; and |
|--------|---------|------------------------------------------------------------------------------|

|   | • | 1,240 customer connection points (customer, generation, and interconnection). |
|--------|---------|-------------------------------------------------------------------------------|

Natural Resource Stewardship Properties

|   | • | Approximately 11,000 miles of reservoir shoreline; |
|--------|---------|----------------------------------------------------|

|   | • | Approximately 293,000 acres of reservoir land; |
|--------|---------|------------------------------------------------|

|   | • | Approximately 650,000 surface acres of water; and |
|--------|---------|---------------------------------------------------|

|   | • | Over 100 public recreation facilities. |
|--------|---------|----------------------------------------|

Buildings

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Disposal of Property

|   | • | Under section 31 of the TVA Act, TVA has authority to dispose of surplus real property at a public auction. |
|--------|---------|-------------------------------------------------------------------------------------------------------------|

|   | • | Under section 4(k) of the TVA Act, TVA can dispose of real property for certain specified purposes, including providing replacement lands for certain entities whose lands were flooded or destroyed by dam or reservoir construction and to grant easements and rights-of-way upon which are located transmission or distribution lines. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Under section 15d(g) of the TVA Act, TVA can dispose of real property in connection with the construction of generating plants or other facilities under certain circumstances. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Under 40 U.S.C. § 1314, TVA has authority to grant easements for rights-of-way and other purposes. |
|--------|---------|---------------------------------------------------------------------------------------------------------|

ITEM 3.  LEGAL PROCEEDINGS

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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 6.  SELECTED FINANCIAL DATA

| Selected Financial Data(1), (2)For the years ended, or as of, September 30(dollars in millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales (millions of kWh)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 173,662 |   |   |   | 163,804 |   |   |   | 176,304 |   |   |   | 175,529 |   |   |   | 171,651 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Peak Load (MW)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 31,778 |   |   |   | 32,572 |   |   |   | 32,027 |   |   |   | 30,320 |   |   |   | 27,718 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $ | 10,874 |   |   | $ | 11,255 |   |   | $ | 10,382 |   |   | $ | 9,326 |   |   | $ | 8,983 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and purchased power                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $ | 3,219 |   |   | $ | 4,745 |   |   | $ | 4,176 |   |   | $ | 3,449 |   |   | $ | 3,342 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating and maintenance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $ | 3,232 |   |   | $ | 2,395 |   |   | $ | 2,307 |   |   | $ | 2,353 |   |   | $ | 2,328 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $ | 1,294 |   |   | $ | 1,272 |   |   | $ | 1,376 |   |   | $ | 1,232 |   |   | $ | 1,264 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $ | 972 |   |   | $ | 726 |   |   | $ | 817 |   |   | $ | 423 |   |   | $ | 113 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $ | 2,015 |   |   | $ | 1,793 |   |   | $ | 1,984 |   |   | $ | 1,379 |   |   | $ | 1,370 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 42,753 |   |   | $ | 40,017 |   |   | $ | 37,137 |   |   | $ | 33,732 |   |   | $ | 34,308 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net long-term statutory debt, excluding  current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $ | 22,389 |   |   | $ | 21,788 |   |   | $ | 20,404 |   |   | $ | 21,099 |   |   | $ | 19,544 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 27 |   |   |   | 844 |   |   |   | 185 |   |   |   | 1,422 |   |   |   | 2,376 |   |
| Current maturities of long-term debt, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 1,008 |   |   |   | 8 |   |   |   | 2,030 |   |   |   | 90 |   |   |   | 985 |   |
|    Total short-term statutory debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 1,035 |   |   |   | 852 |   |   |   | 2,215 |   |   |   | 1,512 |   |   |   | 3,361 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total statutory debit(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $ | 23,424 |   |   | $ | 22,640 |   |   | $ | 22,619 |   |   | $ | 22,611 |   |   | $ | 22,905 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital leases(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $ | 47 |   |   | $ | 77 |   |   | $ | 95 |   |   | $ | 104 |   |   | $ | 128 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Leaseback obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $ | 1,353 |   |   | $ | 1,403 |   |   | $ | 1,353 |   |   | $ | 1,072 |   |   | $ | 1,108 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Energy prepayment obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $ | 822 |   |   | $ | 927 |   |   | $ | 1,033 |   |   | $ | 1,138 |   |   | $ | 1,244 |   |
|  Notes(1) See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations for a description of special items in 2010, 2009, and2008 affecting results in those years. In addition, during 2006, TVA adopted a new accounting methodology for conditional asset retirement obligations thatresulted in a cumulative effect charge to income of $109 million and an increase in accumulated depreciation of $20 million.(2) See Item 1A, Risk Factors and Note 20 for a discussion of risks and contingencies that could affect TVA’s future financial results.(3) Prior to 2007, TVA reported certain revenue not directly associated with revenue derived from electric operations as Operating revenues. This income of $10 million for 2006 has been reclassified from Operating revenues to Other income.(4)  Statutory debt is debt subject to the $30.0 billion limit on bonds, notes, and other evidences of indebtedness as defined in the TVA Act of 1933, asamended.(5) Included in Accrued liabilities and Other liabilities on the balance sheets. |   |

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

| (1)   | TVA is a government corporation. |
|-----------------|----------------------------------|

| (2)   | The area in which TVA sells power is limited by the TVA Act under a provision known as the “fence”; however, another provision of federal law known as the “anti-cherrypicking” provision generally protects TVA from being forced to provide access to its transmission lines to others for the purpose of delivering power to customers within substantially all of TVA’s defined service area. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Unlike other utilities, the rates TVA charges for power are not set or reviewed by another entity, such as a public utility commission.  TVA's rates are set solely by the TVA Board.  In setting rates, however, the TVA Board is charged by the TVA Act to have due regard for the primary objectives of the TVA Act, including the objective that power be sold at rates as low as feasible. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | TVA, unlike investor-owned power companies, is not authorized to raise capital by issuing equity securities.  TVA relies primarily on cash from operations and proceeds from power program borrowings to fund its operations and is authorized by the TVA Act to issue bonds, notes, and other evidences of indebtedness (“Bonds”) in an amount not to exceed $30.0 billion outstanding at any given time.  Although TVA’s operations were originally funded primarily with appropriations from Congress, TVA has not received any appropriations from Congress for any activities since 1999 and, as directed by Congress, has funded essential stewardship activities primarily with power revenues. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Executive Summary

2010 Highlights

| •   | TVA received a favorable court ruling related to its alleged violation of the New Source Review regulations at its Bull Run Fossil Plant (“Bull Run”). |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | TVA completed the installation of scrubbers at the Kingston Fossil Plant ("Kingston"). |
|---------------------|----------------------------------------------------------------------------------------|

| •   | TVA executed an agreement with a leading provider of clean and intelligent energy management applications and services for a demand response program that is expected to provide up to 560 MW of peak load reduction. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | TVA entered into seven contracts for the purchase of up to 1,380 MW of wind energy.  An agreement to purchase an additional 200 MW of wind energy was executed on October 7, 2010. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | For the eleventh straight year, TVA’s transmission system operated with 99.999 percent reliability in delivering electricity to customers. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | The Lagoon Creek Combined Cycle Facility, which has a summer net capability of approximately 550 MW, began commercial operation on September 28, 2010. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | TVA completed a major 500-kilovolt transmission project in May 2010 as well as upgrades to a 500-kV substation undertaken as a result of growth in demand in middle Tennessee. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | TVA experienced improvements in safety and performed in the top decile in the utility industry. |
|---------------------|-------------------------------------------------------------------------------------------------|

| •   | Browns Ferry Nuclear Plant (“Browns Ferry”) Unit 1 completed a 586 day run from March 15, 2009 to October 23, 2010, during which it produced over 14,583 GWh of electricity. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | TVA’s economic development efforts helped recruitment and/or expansion of over 150 companies into the TVA service area.  These companies announced capital investments of over $4.3 billion and the expected creation and/or retention of over 40,500 jobs.  In addition, Toyota resumed construction of its new plant in Mississippi during 2010. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

2010 Challenges

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Future Challenges

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Liquidity and Capital Resources

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| •   | Operation, maintenance, and administration of its power system; |
|---------------------|-----------------------------------------------------------------|

| •   | Payments to states and counties in lieu of taxes; |
|---------------------|---------------------------------------------------|

| •   | Debt service on outstanding Bonds; |
|---------------------|------------------------------------|

| •   | Payments to the U.S. Treasury as a repayment of and a return on the Power Program Appropriation Investment; and |
|---------------------|-----------------------------------------------------------------------------------------------------------------|

| •   | Such additional margin as the TVA Board may consider desirable for investment in power system assets, retirement of outstanding Bonds in advance of maturity, additional reduction of the government’s appropriation investment in TVA’s power facilities (the “Power Program Appropriation Investment”), and other purposes connected with TVA’s power business, having due regard for the primary objectives of the TVA Act, including the objective that power shall be sold at rates as low as are feasible.  See Note 15 — Appropriation Investment. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | The depreciation accruals and other charges representing the amortization of capital expenditures, and |
|---------------------|--------------------------------------------------------------------------------------------------------|

| •   | The net proceeds from any disposition of power facilities, |
|---------------------|------------------------------------------------------------|

| •   | The reduction of its capital obligations (including Bonds and the Power Program Appropriation Investment), or |
|---------------------|---------------------------------------------------------------------------------------------------------------|

| •   | Investment in power assets. |
|---------------------|-----------------------------|

| Short-Term Borrowing Table                                                                                                                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                            |   | At September 30, 2010 |   |   | For Quarter Ended September 30, 2010 |   |   | For Year Ended September 30, 2010 |   |   | At September 30, 2009 |   |   | For Year Ended September 30, 2009 |   |   | At September 30, 2008 |   |   | For Year Ended September 30, 2008 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount Outstanding (at End of Period) or Average Amount Outstanding (During Period)                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Discount Notes                                                                                                                                                                                      |   | $ | 27  |   |   | $ | 745  |   |   | $ | 905 |   |   | $ | 844 |   |   | $ | 1,650 |   |   | $ |  185 |   |   | $ | 767 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Borrowings from U.S. Treasury*                                                                                                                                                                      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 74 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Interest Rate                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Discount Notes                                                                                                                                                                                      |   |   | 0.040 | % |   |   | 0.146 | % |   |   | 0.089 | % |   |   | 0.063 | % |   |   | 0.323 | % |   |   | 1.258 | % |   |   | 3.709 | % |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Borrowings from U.S. Treasury*                                                                                                                                                                      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   |   — |   |   |   | 3.020 | % |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Maximum Month-End Amount Outstanding During Period                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Discount Notes                                                                                                                                                                                      |   | $ | — |   |   | $ | 996 |   |   | $ | 1,176 |   |   | $ | — |   |   | $ | 2,637 |   |   | $ | — |   |   | $ | 1,570 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Borrowings from U.S. Treasury*                                                                                                                                                                      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 148 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Notes*  In 2009, TVA and the U.S. Treasury replaced previous financing arrangements with a memorandum of understanding, under which TVA now has a $150 million credit facility with theU.S.Treasury. |   |

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Table of Contents

| Outstanding Power BondsAs of September 30, 2010                                                                                                                                                                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| CUSIP or Other Identifier                                                                                                                                                                                                                                                                                                                         |   | Maturity |   | Coupon Rate |   |   | PrincipalAmount (1) |   | Stock Exchange Listings |
| electronotes®                                                                                                                                                                                                                                                                                                                                |   | 02/15/2020 - 10/15/2029 |   |   | 2.650% - 5.500 | %(2) |   | $ | 594 |   | None |
| 880591DN9                                                                                                                                                                                                                                                                                                                                         |   | 01/18/2011 |   |   | 5.625 | % |   |   | 1,000 |   | New York, Luxembourg |
| 880591DL3                                                                                                                                                                                                                                                                                                                                         |   | 05/23/2012 |   |   | 7.140 | % |   |   | 29 |   | New York |
| 880591DT6                                                                                                                                                                                                                                                                                                                                         |   | 05/23/2012 |   |   | 6.790 | % |   |   | 1,486 |   | New York |
| 880591CW0                                                                                                                                                                                                                                                                                                                                         |   | 03/15/2013 |   |   | 6.000 | % |   |   | 1,359 |   | New York, Hong Kong, Luxembourg, Singapore |
| 880591DW9                                                                                                                                                                                                                                                                                                                                         |   | 08/01/2013 |   |   | 4.750 | % |   |   | 940 |   | New York, Luxembourg |
| 880591DY5                                                                                                                                                                                                                                                                                                                                         |   | 06/15/2015 |   |   | 4.375 | % |   |   | 1,000 |   | New York, Luxembourg |
| 880591EE8                                                                                                                                                                                                                                                                                                                                         |   | 11/15/2015 |   |   | 2.250 | % |   |   | 18 |   | None |
| 880591DS8                                                                                                                                                                                                                                                                                                                                         |   | 12/15/2016 |   |   | 4.875 | % |   |   | 524 |   | New York |
| 880591EA6                                                                                                                                                                                                                                                                                                                                         |   | 07/18/2017 |   |   | 5.500 | % |   |   | 1,000 |   | New York, Luxembourg |
| 880591CU4                                                                                                                                                                                                                                                                                                                                         |   | 12/15/2017 |   |   | 6.250 | % |   |   | 650 |   | New York |
| 880591EC2                                                                                                                                                                                                                                                                                                                                         |   | 04/01/2018 |   |   | 4.500 | % |   |   | 1,000 |   | New York, Luxembourg |
| 880591DC3                                                                                                                                                                                                                                                                                                                                         |   | 06/07/2021 |   |   | 5.805 | %(3) |   |   | 314 |   | New York, Luxembourg |
| 880591CJ9                                                                                                                                                                                                                                                                                                                                         |   | 11/01/2025 |   |   | 6.750 | % |   |   | 1,350 |   | New York, Hong Kong, Luxembourg, Singapore |
| 880591300                                                                                                                                                                                                                                                                                                                                         |   | 06/01/2028 |   |   | 4.728 | % |   |   | 330 |   | New York |
| 880591409                                                                                                                                                                                                                                                                                                                                         |   | 05/01/2029 |   |   | 4.500 | % |   |   | 274 |   | New York |
| 880591DM1                                                                                                                                                                                                                                                                                                                                         |   | 05/01/2030 |   |   | 7.125 | % |   |   | 1,000 |   | New York, Luxembourg |
| 880591DP4                                                                                                                                                                                                                                                                                                                                         |   | 06/07/2032 |   |   | 6.587 | %(3) |   |   | 393 |   | New York, Luxembourg |
| 880591DV1                                                                                                                                                                                                                                                                                                                                         |   | 07/15/2033 |   |   | 4.700 | % |   |   | 472 |   | New York, Luxembourg |
| 880591EF5                                                                                                                                                                                                                                                                                                                                         |   | 06/15/2034 |   |   | 3.770 | % |   |   | 448 |   | None |
| 880591DX7                                                                                                                                                                                                                                                                                                                                         |   | 06/15/2035 |   |   | 4.650 | % |   |   | 436 |   | New York |
| 880591CK6                                                                                                                                                                                                                                                                                                                                         |   | 04/01/2036 |   |   | 5.980 | % |   |   | 121 |   | New York |
| 880591CS9                                                                                                                                                                                                                                                                                                                                         |   | 04/01/2036 |   |   | 5.880 | % |   |   | 1,500 |   | New York |
| 880591CP5                                                                                                                                                                                                                                                                                                                                         |   | 01/15/2038 |   |   | 6.150 | % |   |   | 1,000 |   | New York |
| 880591ED0                                                                                                                                                                                                                                                                                                                                         |   | 06/15/2038 |   |   | 5.500 | % |   |   | 500 |   | New York |
| 880591EH1                                                                                                                                                                                                                                                                                                                                         |   | 09/15/2039 |   |   | 5.250 | % |   |   | 2,000 |   | New York |
| 880591BL5                                                                                                                                                                                                                                                                                                                                         |   | 04/15/2042 |   |   | 8.250 | % |   |   | 1,000 |   | New York |
| 880591DU3                                                                                                                                                                                                                                                                                                                                         |   | 06/07/2043 |   |   | 4.962 | %(3) |   |   | 236 |   | New York, Luxembourg |
| 880591CF7                                                                                                                                                                                                                                                                                                                                         |   | 07/15/2045 |   |   | 6.235 | % |   |   | 140 |   | New York |
| 880591EB4                                                                                                                                                                                                                                                                                                                                         |   | 01/15/2048 |   |   | 4.875 | % |   |   | 500 |   | New York, Luxembourg |
| 880591DZ2                                                                                                                                                                                                                                                                                                                                         |   | 04/01/2056 |   |   | 5.375 | % |   |   | 1,000 |   | New York |
| 880591EJ7                                                                                                                                                                                                                                                                                                                                         |   | 09/15/2060 |   |   | 4.625 | % |   |   | 1,000 |   | New York |
| Subtotal                                                                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   | 23,614 |   |   |
| Unamortized discounts, premiums, and other                                                                                                                                                                                                                                                                                                        |   |   |   | (216 | ) |   |
|  Total outstanding power bonds, net                                                                                                                                                                                                                                                                                                          |   |   | $ | 23,398 |   |   |
|  Notes(1) The above table includes net exchange losses from currency transactions of $14 million at September 30, 2010.(2) The weighted average interest rate of TVA’s outstanding electronotes® was 4.47 percent at September 30, 2010.(3) The interest rate represents TVA’s effective interest rate. |

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Table of Contents

| •   | In 2003, TVA monetized the call provisions on a $1.0 billion Bond issue and a $476 million Bond issue by entering into swaption agreements with a third party in exchange for $175 million and $81 million, respectively. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | In 2005, TVA monetized the call provisions on two Bond issues ($42 million total par value) by entering into swaption agreements with a third party in exchange for $5 million. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| Summary Cash FlowsFor the years ended September 30         |   |
|-----------------------------------------------------------------|--------|
|                                                            |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Cash provided by (used in):                                     |   |   |   |   |   |   |   |   |   |   |
| Operating activities                                            |   |   | $ | 1,901 |   |   | $ | 2,163 |   |   | $ | 1,967 |   |
| Investing activities                                            |   |   |   | (2,458 | ) |   |   | (2,287 | ) |   |   | (2,309 | ) |
| Financing activities                                            |   |   |   | 684 |   |   |   | 112 |   |   |   | 390 |   |
|  Net increase (decrease) in cash and cash equivalents |   |   | $ | 127 |   |   | $ | (12 | ) |   | $ | 48 |   |

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Table of Contents

| Future Planned Construction Expenditures(1)As of September 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | Actual |   |   | Estimated Construction Expenditures |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |
| Watts Bar Unit 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | $ | 690 |   |   | $ | 635 |   |   | $ | 441 |   |   | $ | — |   |
| Other capacity expansion expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   | 374 |   |   |   | 600 |   |   |   | 819 |   |   |   | 943 |   |
| Environmental expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   | 58 |   |   |   | 100 |   |   |   | 219 |   |   |   | 513 |   |
| Ash pond remediation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   | 103 |   |   |   | 141 |   |   |   | 107 |   |   |   | 120 |   |
| Transmission expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   | 202 |   |   |   | 249 |   |   |   | 271 |   |   |   | 280 |   |
| Other capital expenditures (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   | 596 |   |   |   | 779 |   |   |   | 784 |   |   |   | 840 |   |
|  Total capital projects requirements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | $ | 2,023 | (3) |   | $ | 2,504 |   |   | $ | 2,641 |   |   | $ | 2,696 |   |
|  Notes(1) TVA plans to fund these expenditures with cash from operations and proceeds from power program financings. This tableshows only expenditures that are currently planned. Additional expenditures may be required among other things for TVA to meetgrowth in demand for power in its service area or to comply with new environmental laws, regulations, or orders.(2) Other capital expenditures are primarily associated with short lead time construction projects aimed at the continued safe andreliable operation of generating assets.(3) The numbers above exclude Allowance for Funds Used During Construction ("AFUDC") of $57 million and include itemsaccrued of $65 million. |

| Commitments and ContingenciesPayments due in the year ending September 30                                                                        |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                  |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |   | Thereafter |   |   | Total |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt*                                                                                                                                                 |   |   | $ | 1,035 |   |   | $ | 1,523 |   |   | $ | 2,308 |   |   | $ | 32 |   |   | $ | 1,032 |   |   | $ | 17,696 |   |   | $ | 23,626 |   |
| Interest payments relating to debt                                                                                                                    |   |   |   | 1,339 |   |   |   | 1,310 |   |   |   | 1,166 |   |   |   | 1,081 |   |   |   | 1,080 |   |   |   | 19,916 |   |   |   | 25,892 |   |
| Lease obligations                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Capital                                                                                                                             |   |   |   | 53 |   |   |   | 5 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2 |   |   |   | 60 |   |
|    Non-cancelable operating                                                                                                            |   |   |   | 49 |   |   |   | 41 |   |   |   | 39 |   |   |   | 28 |   |   |   | 25 |   |   |   | 171 |   |   |   | 353 |   |
| Purchase obligations                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Power                                                                                                                               |   |   |   | 275 |   |   |   | 256 |   |   |   | 197 |   |   |   | 189 |   |   |   | 238 |   |   |   | 4,304 |   |   |   | 5,459 |   |
|    Fuel                                                                                                                                |   |   |   | 1,956 |   |   |   | 1,360 |   |   |   | 1,174 |   |   |   | 865 |   |   |   | 825 |   |   |   | 1,712 |   |   |   | 7,892 |   |
|    Other                                                                                                                               |   |   |   | 85 |   |   |   | 118 |   |   |   | 113 |   |   |   | 122 |   |   |   | 55 |   |   |   | 313 |   |   |   | 806 |   |
| Litigation settlement                                                                                                                                 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |   | — |   |   |   | — |   |   |   | 12 |   |
| Environmental cleanup costs-Kingston ash spill                                                                                                        |   |   |   | 220 |   |   |   | 124 |   |   |   | 97 |   |   |   | 84 |   |   |   | — |   |   |   | — |   |   |   | 525 |   |
| Payments on other financings                                                                                                                          |   |   |   | 135 |   |   |   | 136 |   |   |   | 488 |   |   |   | 100 |   |   |   | 104 |   |   |   | 713 |   |   |   | 1,676 |   |
| Payments to U.S. Treasury                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Return of Power Program    Appropriation Investment                                                             |   |   |   | 20 |   |   |   | 20 |   |   |   | 20 |   |   |   | 10 |   |   |   | — |   |   |   | — |   |   |   | 70 |   |
|    Return on Power Program    Appropriation Investment                                                             |   |   |   | 8 |   |   |   | 22 |   |   |   | 20 |   |   |   | 19 |   |   |   | 18 |   |   |   | 235 |   |   |   | 322 |   |
|  Total                                                                                                                                           |   |   | $ | 5,178 |   |   | $ | 4,918 |   |   | $ | 5,625 |   |   | $ | 2,533 |   |   | $ | 3,377 |   |   | $ | 45,062 |   |   | $ | 66,693 |   |
|  Notes* Does not include noncash items of foreign currency valuation loss of $14 million and net discount on sale of Bonds of $216 million. |   |

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Table of Contents

| Energy Prepayment Obligations  |   |
|-------------------------------------|--------|
|                                |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |   | Thereafter |   |   | Total |   |
| Energy Prepayment Obligations       |   |   | $ | 105 |   |   | $ | 105 |   |   | $ | 102 |   |   | $ | 100 |   |   | $ | 100 |   |   | $ | 310 |   |   | $ | 822 |   |

Results of Operations

| Sales of ElectricityFor the years ended September 30   |   |
|--------------------------------------------------------|--------|
| (millions of kWh)                                 |   |
|                                                   |   |   | 2010 |   |   | Percent Change |   |   | 2009 |   |   | Percent Change |   |   | 2008 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipalities and cooperatives                        |   |   |   | 141,448 |   |   |   | 6.3 | % |   |   | 133,078 |   |   |   | (4.7 | %) |   |   | 139,596 |   |
| Industries directly served                             |   |   |   | 30,099 |   |   |   | 4.8 | % |   |   | 28,718 |   |   |   | (17.2 | %) |   |   | 34,695 |   |
| Federal agencies and other                             |   |   |   | 2,115 |   |   |   | 5.3 | % |   |   | 2,008 |   |   |   | (0.2 | %) |   |   | 2,013 |   |
| Total sales of electricity                             |   |   |   | 173,662 |   |   |   | 6.0 | % |   |   | 163,804 |   |   |   | (7.1 | %) |   |   | 176,304 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weather Normalized Sales      |   |   |   | 168,852  |   |   |   |  0.6 | % |   |   | 167,807  |   |   |   | (7.0  | %)  |   |   | 180,477  |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Heating degree days (normal 3,408)                     |   |   |   | 3,672 |   |   |   | 7.9 | % |   |   | 3,403 |   |   |   | 9.5 | % |   |   | 3,109 |   |
| Cooling degree days (normal 1,859)                     |   |   |   | 2,385 |   |   |   | 30.4 | % |   |   | 1,829 |   |   |   | (8.1 | %) |   |   | 1,990 |   |
| Combined degree days (normal 5,267)                    |   |   |   | 6,057 |   |   |   | 15.8 | % |   |   | 5,232 |   |   |   | 2.6 | % |   |   | 5,099 |   |
|                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

| Summary Statements of OperationsFor the years ended September 30  |   |
|------------------------------------------------------------------------|--------|
|                                                                   |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                     |   |   | $ | 10,874 |   |   | $ | 11,255 |   |   | $ | 10,382 |   |
| Operating expenses                                                     |   |   |   | (8,632 | ) |   |   | (9,282 | ) |   |   | (8,198 | ) |
| Operating income                                                       |   |   |   | 2,242 |   |   |   | 1,973 |   |   |   | 2,184 |   |
| Other income, net                                                      |   |   |   | 24 |   |   |   | 25 |   |   |   | 9 |   |
| Interest expense, net                                                  |   |   |   | (1,294 | ) |   |   | (1,272 | ) |   |   | (1,376 | ) |
|    Net income                                                |   |   | $ | 972 |   |   | $ | 726 |   |   | $ | 817 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Operating RevenueFor the years ended September 30  |   |
|---------------------------------------------------------|--------|
|                                                    |   |   | 2010 |   |   | Percent Change |   |   | 2009 |   |   | Percent Change |   |   | 2008 |   |
| Operating Revenues                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Municipalities and cooperatives                  |   |   | $ | 9,275 |   |   |   | (3.8 | %) |   | $ | 9,644 |   |   |   | 11.4 | % |   | $ | 8,659 |   |
|   Industries directly served                       |   |   |   | 1,321 |   |   |   | (3.4 | %) |   |   | 1,367 |   |   |   | (7.1 | %) |   |   | 1,472 |   |
|   Federal agencies and other                       |   |   |   | 117 |   |   |   | (10.7 | %) |   |   | 131 |   |   |   | 8.3 | % |   |   | 121 |   |
| Other revenue                                           |   |   |   | 161 |   |   |   | 42.5 | % |   |   | 113 |   |   |   | (13.1 | %) |   |   | 130 |   |
|    Total operating revenues                   |   |   | $ | 10,874 |   |   |   | (3.4 | %) |   | $ | 11,255 |   |   |   | 8.4 | % |   | $ | 10,382 |   |

|                       |   |   | Variance 2010 vs. 2009 |   |    | Variance 2009 vs. 2008 |   |
|----------------------------|--------|--------|------------------------|--------|---------|------------------------|--------|
|                       |   |   |                   |   |    |                   |   |
| Base rate changes          |   |   | $                      | 707    |    |                   | $      | 754 |   |
| FCA rate changes           |   |   |                   | (1,714 | )       |                   |   | 742 |   |
| Volume                     |   |   |                   | 580    |    |                   |   | (598 | ) |
| Off system sales and other |   |   |                   | (2     | )       |                   |   | (8 | ) |
| Other revenue              |   |   |                   | 48     |    |                   |   | (17 | ) |
|  Total                |   |   | $                      | (381   | )  |                   | $      | 873 |   |

|   | • | A $369 million decrease in revenue from Municipalities and cooperatives primarily due to FCA rate decreases which reduced revenues by $1.5 billion.  This decrease was offset partially by a nine percent increase in base rates effective in October 2009, which provided $629 million in revenues and an increase in sales volume of 6.3 percent, which increased revenues an additional $521 million. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $46 million decrease in revenues from Industries directly served primarily due to FCA rate decreases, which reduced revenues by $174 million.  This decrease was offset partially by a nine percent increase in base rates mentioned above, which provided $72 million in revenues, and an increase in sales volume of 4.8 percent, which increased revenues an additional $56 million. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $14 million decrease in revenues from Federal Agencies and other as a result of a $12 million decrease in revenues from federal agencies directly served primarily due to the FCA rate decreases and $7 million in capitalized revenue related to pre-commercial operations of the Lagoon Creek Combined Cycle Facility.  These items were offset partially by an increase in off-system sales of $5 million. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | A $985 million increase in revenue from Municipalities and cooperatives primarily due to an increase in average base rates of 9.1 percent due to base rate increases effective April 1, 2008 and October 1, 2008, which together provided $689 million in additional revenue.  FCA rate increases provided an additional $669 million in revenue.  These increases were offset partially by a decline in sales volume of 4.7 percent, which reduced revenues by $373 million. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $105 million decrease in revenue from Industries directly served primarily due to decreased sales volume of 17.2 percent, which reduced revenues by $230 million.  This decrease was offset partially by FCA rate increases which provided $63 million in additional revenue, and an increase in average base rates of 5.6 percent which provided $62 million in additional revenues. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $10 million increase in revenue from Federal agencies and other as a result of an $18 million increase in revenues from federal agencies directly served primarily due to the FCA rate increases and increased volume.  This increase was offset partially by a decrease in off-system sales of $8 million due to decreased volume. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| TVA Operating ExpensesFor the years ended September 30  |   |
|--------------------------------------------------------------|--------|
|                                                         |   |   | 2010 |   |   | Percent Change |   |   | 2009 |   |   | Percent Change |   |   | 2008 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and purchased power                                     |   |   | $ | 3,219 |   |   |   | (32.2 | %) |   | $ | 4,745 |   |   |   | 13.6 | % |   | $ | 4,176 |   |
| Operating and maintenance                                    |   |   |   | 3,232 |   |   |   | 34.9 | % |   |   | 2,395 |   |   |   | 3.8 | % |   |   | 2,307 |   |
| Depreciation, amortization, and accretion                    |   |   |   | 1,724 |   |   |   | 7.9 | % |   |   | 1,598 |   |   |   | 30.6 | % |   |   | 1,224 |   |
| Tax equivalents                                              |   |   |   | 457 |   |   |   | (16.0 | %) |   |   | 544 |   |   |   | 10.8 | % |   |   | 491 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total operating expenses                               |   |   | $ | 8,632 |   |   |   | (7.0 | %) |   | $ | 9,282 |   |   |   | 13.2 | % |   | $ | 8,198 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | • | A $1.7 billion decrease in fuel and purchased power expense related to the FCA mechanism which matches the recognition of fuel and purchased power expense with the period it is collected in the FCA.  This decrease primarily resulted from a decrease in the FCA rate, which included the liquidation in 2010 of FCA amounts that were overcollected during 2009. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $118 million increase in fuel expense resulting from a five percent increase in the aggregate fuel cost per kWh of net thermal generation, which caused a $104 million increase in fuel expense.  Additionally, net thermal generation increased slightly, which increased fuel expense by $14 million.  The additional generation required to meet the six percent increase in electricity sales in 2010 compared to 2009 was primarily met through increased hydroelectric generation of 2.6 billion kWh, or 21 percent, and an increase in purchased power during 2010 due to economically favorable prices for purchased power. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | • | An $80 million increase in purchased power expense primarily because of an increase in purchased power volume of 6.7 billion kWh or 30 percent, which increased purchased power expense by $408 million.  This increase was offset partially by a decrease in the average price of purchased power of 19 percent in 2010, compared to 2009, which decreased purchased power expense by $328 million.  Included in the favorable rate variance was a decrease in net realized losses related to natural gas derivatives of $253 million compared to 2009.  Lower priced purchased power allowed TVA to displace some of the generation from its less economical generating units with purchased power. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | A $717 million increase due to deferred fuel expense to be returned to customers in 2010 as part of the FCA mechanism. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------|

|   | • | A $113 million decrease in fuel expense from a decrease in net thermal generation of 12 percent, which reduced fuel expense by $295 million.  The decrease in net thermal generation was due to lower demand, an increase in conventional hydroelectric generation of 4.7 billion kWh or 64 percent, and the decision to purchase more power in 2009 due to favorable market prices.  The aggregate fuel cost per kWh net thermal generation increased nine percent and resulted in an increase of $182 million in fuel expense.  The higher fuel cost was primarily due to higher prices for coal and was offset partially by lower prices for natural gas. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A $35 million decrease in purchased power expense primarily due to a decrease in the average price of purchased power of 36 percent in 2009 compared to 2008, which resulted in a $529 million reduction in expense.  This decrease was offset partially by an increase in purchased power volume of six  percent, which increased purchased power expense by $80 million.  Purchased power expense also increased $414 million due to net realized losses related to natural gas derivatives compared to net realized gains on such derivative contracts in 2008. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Interest ExpenseFor the years ended September 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 2010 |   |   | PercentChange |   |   | 2009 |   |   | PercentChange |   |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on debt and leaseback obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $ | 1,353 |   |   |   | 4.7 | % |   | $ | 1,292 |   |   |   | (5.9 | %) |   | $ | 1,373 |   |
| Amortization of debt discount, issue, and reacquisition costs, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 20 |   |   |   | 0.0 | % |   |   | 20 |   |   |   | 0.0 | % |   |   | 20 |   |
| Allowance for funds used during construction and nuclear fuel expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | (79 | ) |   |   | 97.5 | % |   |   | (40 | ) |   |   | 135.3 | % |   |   | (17 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $ | 1,294 |   |   |   | 1.7 | % |   | $ | 1,272 |   |   |   | (7.6 | %) |   | $ | 1,376 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 2010 |   |   | PercentChange |   |   |   | 2009 |   |   | PercentChange |   |   |   | 2008 |   |
| Interest rates (average)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Long-term*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 5.91 |   |   |   | (1.2 | %) |   |   | 5.98 |   |   |   | 1.2 | % |   |   | 5.91 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Discount notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 0.09 |   |   |   | (71.9 | %) |   |   | 0.32 |   |   |   | (91.4 | %) |   |   | 3.71 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Blended*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 5.68 |   |   |   | 2.0 | % |   |   | 5.57 |   |   |   | (4.6 | %) |   |   | 5.84 |   |
|  Note* The average interest rates on long-term debt reflected in the table above are calculated using an average of long-term debt balances at the end of each month in the fiscal years depicted, and interest expense for those periods. Interest expense is interest on long-term debt, including amortization of debt discounts, issue, and reaquisition costs, net. Average long-term interest rates reported in previous TVA reports were calculated using the average balance of debt based at the beginning and ending of the fiscal year.  The calculation was changed so that the average rate reflects fluctuations in the balance of long-term debt throughout the year and the impact on interest expense. |   |

Off-Balance Sheet Arrangements

Critical Accounting Policies and Estimates

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| •   | Final Closure Design – TVA is still in the process of designing the final closure of the failed dredge cell, other cells on-site, and the lateral expansion of the failed cell.  Until the final design is completed and contracts for the work are awarded, costs estimates are subject to change. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Excluded Costs – TVA has not included the following categories of costs because it has determined that these costs are currently either not probable or not reasonably estimable: penalties (other than the penalties set out in the TDEC order) or regulatory directives, natural resource damages, outcome of lawsuits, future claims, long-term environmental impact costs, final long-term disposition of ash processing area, costs associated with new laws and regulations, or costs of remediating any mixed waste discovered during the ash removal process.  See Note 8. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | Timing – 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 a multiple unit site, the estimated retirement date is based on the unit with the longest licensed period remaining, or an assumption could be made that the plant will be relicensed and operate for some time beyond the original license term.)  Second, an assumption must be made whether decommissioning will begin immediately upon plant retirement, or whether the plant will be held in SAFSTOR status – a status authorized by applicable regulations which allows a nuclear facility to be maintained and monitored in a condition that allows the radioactivity to decay, after which the facility is decommissioned and dismantled.  While the impact of these assumptions cannot be determined with precision, assuming either license extension or use of SAFSTOR status can significantly decrease the present value of these obligations. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Technology and Regulation – There is limited experience with actual decommissioning of large nuclear facilities.  Changes in technology and experience as well as changes in regulations regarding nuclear decommissioning could cause cost estimates to change significantly.  TVA’s cost studies assume current technology and regulations. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Discount Rate – TVA uses a blended rate of 5.3 percent to calculate the present value of the weighted estimated cash flows required to satisfy TVA’s decommissioning obligation. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Investment Rate of Return – TVA assumes that its decommissioning investments will achieve a rate of return that is five percent greater than the rate of inflation.  This results in a 9.2 percent estimated investment rate of return for all periods presented. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Cost Escalation Factors – TVA’s decommissioning estimates include an assumption that decommissioning costs will escalate over present cost levels by four percent annually. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | Timing – In projecting non-nuclear decommissioning costs, the date of the asset’s retirement must be estimated.  TVA uses a probability-weighted scenario approach based on management assumptions, type of asset, and other factors to estimate the expected retirement time period.  In instances where the retirement of a specific asset differs from the anticipated retirement date, the anticipated retirement date of that specific asset is used.  Additionally, TVA expects to incur certain ongoing costs subsequent to the initial asset retirement. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Technology and Regulation – Changes in technology and experience as well as changes in regulations regarding non-nuclear decommissioning could cause cost estimates to change significantly.  TVA’s cost studies generally assume current technology and regulations.  With respect to the CCP facilities, TVA assumes that any future closures will require more costly materials and processes than what is legally required as of September 30, 2010. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Discount Rate – TVA uses its incremental lending rate over a period consistent with the remaining timeframe until the costs are expected to be incurred to calculate the present value of the weighted estimated cash flows required to satisfy TVA’s non-nuclear decommissioning obligation.  As of September 30, 2010, the discount rates used in the calculations range from 0.37 percent to 5.66 percent. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Cost Escalation Factors – TVA’s non-nuclear decommissioning estimates include an assumption that decommissioning costs will escalate over present cost levels at rates between 2.5 percent and four percent annually. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Sensitivity to Certain Changes in Pension Assumptions |   |
|-------------------------------------------------------|--------|
|   Actuarial Assumption                      |   | Change in Assumption |   |   | Impact on 2010 Pension Cost |   |   | Impact on 2010 Projected Benefit Obligation |   |
|                                                  |   |   |   |
| Discount rate                                         |   |   | (0.25 | %) |   | $ | 17 |   |   | $ | 296 |   |
| Rate of return on plan assets                         |   |   | (0.25 | %) |   | $ | 16 |   |   | NA |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |

| Sensitivity to Changes in Assumed Health Care Cost Trend Rates  |   |
|----------------------------------------------------------------------|--------|
|                                                                 |   |   | 1% Increase |   |   | 1% Decrease |   |
| Effect on total of service and interest cost components              |   |   | $ | 5 |   |   | $ | (6 | ) |
| Effect on end-of-year accumulated post-retirement benefit obligation |   |   | $ | 78 |   |   | $ | (87 | ) |

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Changes in Ratemaking Impacting Accounting

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Fair Value Measurements

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New Accounting Standards and Interpretations

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Legislative and Regulatory Matters

Environmental Matters

Legal Proceedings

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Risk Management Activities

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| Customer Credit RiskAs of September 30                                                                                                            |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                   |   |   | 2010 |   |   | 2009 |   |
| Trade Accounts Receivable *                                                                                                                            |   |   |   |   |   |   |   |
| Investment Grade                                                                                                                                       |   |   |   |   |   |   |   |
|      Municipalities and cooperative distributor customers                                                                     |   |   | $ | 994 |   |   | $ | 790 |   |
|      Exchange power arrangements                                                                                              |   |   |   | 3 |   |   |   | 2 |   |
|      Industries and federal agencies directly served                                                                          |   |   |   | 40 |   |   |   | 26 |   |
| Internally rated - investment grade                                                                                                                    |   |   |   |   |   |   |   |   |   |
|      Municipalities and cooperative distributor customers                                                                     |   |   |   | 542 |   |   |   | 417 |   |
|      Industries and federal agencies directly served                                                                          |   |   |   | 7 |   |   |   | — |   |
| Non-investment grade                                                                                                                                   |   |   |   |   |   |   |   |   |   |
|      Industries and federal agencies directly served                                                                          |   |   |   | 11 |   |   |   | 5 |   |
| Internally rated - non-investment grade                                                                                                                |   |   |   |   |   |   |   |   |   |
|      Exchange power arrangements                                                                                              |   |   |   | — |   |   |   | — |   |
|      Industries and federal agencies directly served                                                                          |   |   |   | 4 |   |   |   | 9 |   |
|      Subtotal                                                                                                                 |   |   |   | 1,601 |   |   |   | 1,249 |   |
| Other Accounts Receivable                                                                                                                              |   |   |   |   |   |   |   |   |   |
| Miscellaneous accounts                                                                                                                                 |   |   |   | 40 |   |   |   | 52 |   |
| Provision for uncollectible accounts                                                                                                                   |   |   |   | (2 | ) |   |   | (2 | ) |
|      Subtotal                                                                                                                 |   |   |   | 38 |   |   |   | 50 |   |
|            Total                                                                                |   |   | $ | 1,639 |   |   | $ | 1,299 |   |
|  Note* Includes unbilled power receivables of $1,004 million and $940 million as of September 30, 2010 and September 30, 2009, respectively. |   |

| •   | A downgrade would increase TVA’s interest expense by increasing the interest rates that TVA pays on debt securities that it issues.  An increase in TVA’s interest expense would reduce the amount of cash available for other purposes, which could result in the need to increase borrowings, to reduce other expenses or capital investments, or to increase electricity rates. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | A downgrade could result in TVA having to post additional collateral under certain physical and financial contracts that contain rating triggers. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | A downgrade below a contractual threshold could prevent TVA from borrowing under two credit facilities totaling $2.0 billion. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------|

| •   | A downgrade could lower the price of TVA securities in the secondary market, thereby hurting investors who sell TVA securities after the downgrade and diminishing the attractiveness and marketability of TVA Bonds. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

| TENNESSEE VALLEY AUTHORITYSTATEMENTS OF OPERATIONSFor the years ended September 30(in millions)  |   |
|-------------------------------------------------------------------------------------------------------|--------|
|                                                                                                  |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Operating revenues                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Sales of electricity                                                                                  |   |   |   |   |   |   |   |   |   |   |
|     Municipalities and cooperatives                                               |   |   | $ | 9,275 |   |   | $ | 9,644 |   |   | $ | 8,659 |   |
|     Industries directly served                                                    |   |   |   | 1,321 |   |   |   | 1,367 |   |   |   | 1,472 |   |
|     Federal agencies and other                                                    |   |   |   | 117 |   |   |   | 131 |   |   |   | 121 |   |
| Other revenue                                                                                         |   |   |   | 161 |   |   |   | 113 |   |   |   | 130 |   |
| Total operating revenues                                                                              |   |   |   | 10,874 |   |   |   | 11,255 |   |   |   | 10,382 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel and purchased power                                                                              |   |   |   | 3,219 |   |   |   | 4,745 |   |   |   | 4,176 |   |
| Operating and maintenance                                                                             |   |   |   | 3,232 |   |   |   | 2,395 |   |   |   | 2,307 |   |
| Depreciation, amortization, and accretion                                                             |   |   |   | 1,724 |   |   |   | 1,598 |   |   |   | 1,224 |   |
| Tax equivalents                                                                                       |   |   |   | 457 |   |   |   | 544 |   |   |   | 491 |   |
| Total operating expenses                                                                              |   |   |   | 8,632 |   |   |   | 9,282 |   |   |   | 8,198 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                                                      |   |   |   | 2,242 |   |   |   | 1,973 |   |   |   | 2,184 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense), net                                                                           |   |   |   | 24 |   |   |   | 25 |   |   |   | 9 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on debt and leaseback obligations                                                            |   |   |   | 1,353 |   |   |   | 1,292 |   |   |   | 1,373 |   |
| Amortization of debt discount, issue, and reacquisition costs, net                                    |   |   |   | 20 |   |   |   | 20 |   |   |   | 20 |   |
| Allowance for funds used during construction and nuclear fuel expenditures                            |   |   |   | (79 | ) |   |   | (40 | ) |   |   | (17 | ) |
| Net interest expense                                                                                  |   |   |   | 1,294 |   |   |   | 1,272 |   |   |   | 1,376 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                            |   |   | $ | 972 |   |   | $ | 726 |   |   | $ | 817 |   |
| The accompanying notes are an integral part of these financial statements.                            |   |

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| TENNESSEE VALLEY AUTHORITYBALANCE SHEETSAt September 30(in millions)       |   |
|----------------------------------------------------------------------------|--------|
| ASSETS                                                                |   |
|                                                                       |   | 2010 |   |   | 2009 |   |
| Current assets                                                             |   |   |   |   |   |   |
| Cash and cash equivalents                                                  |   | $ | 328 |   |   | $ | 201 |   |
| Accounts receivable, net                                                   |   |   | 1,639 |   |   |   | 1,299 |   |
| Inventories                                                                |   |   | 1,012 |   |   |   | 918 |   |
| Regulatory assets                                                          |   |   | 791 |   |   |   | 684 |   |
| Other current assets                                                       |   |   | 78 |   |   |   | 111 |   |
| Total current assets                                                       |   |   | 3,848 |   |   |   | 3,213 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Property, plant, and equipment                                             |   |   |   |   |   |   |   |   |
| Completed plant                                                            |   |   | 42,997 |   |   |   | 41,273 |   |
| Less accumulated depreciation                                              |   |   | (19,326 | ) |   |   | (18,086 | ) |
| Net completed plant                                                        |   |   | 23,671 |   |   |   | 23,187 |   |
| Construction in progress                                                   |   |   | 3,008 |   |   |   | 2,569 |   |
| Nuclear fuel and capital leases                                            |   |   | 1,151 |   |   |   | 961 |   |
| Total property, plant, and equipment, net                                  |   |   | 27,830 |   |   |   | 26,717 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Investment funds                                                           |   |   | 1,128 |   |   |   | 983 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Regulatory and other long-term assets                                      |   |   |   |   |   |   |   |   |
| Regulatory assets                                                          |   |   | 9,756 |   |   |   | 8,994 |   |
| Other long-term assets                                                     |   |   | 191 |   |   |   | 110 |   |
| Total regulatory and other long-term assets                                |   |   | 9,947 |   |   |   | 9,104 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Total assets                                                               |   | $ | 42,753 |   |   | $ | 40,017 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| LIABILITIES AND PROPRIETARY CAPITAL                                        |   |
| Current liabilities                                                        |   |   |   |   |   |   |   |   |
| Accounts payable and accrued liabilities                                   |   | $ | 1,698 |   |   | $ | 1,253 |   |
| Environmental cleanup costs - Kingston ash spill                           |   |   | 220 |   |   |   | 348 |   |
| Accrued interest                                                           |   |   | 407 |   |   |   | 401 |   |
| Current portion of leaseback obligations                                   |   |   | 74 |   |   |   | 463 |   |
| Current portion of energy prepayment obligations                           |   |   | 105 |   |   |   | 105 |   |
| Regulatory liabilities                                                     |   |   | 63 |   |   |   | 1,003 |   |
| Short-term debt, net                                                       |   |   | 27 |   |   |   | 844 |   |
| Current maturities of long-term debt                                       |   |   | 1,008 |   |   |   | 8 |   |
| Total current liabilities                                                  |   |   | 3,602 |   |   |   | 4,425 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Other liabilities                                                          |   |   |   |   |   |   |   |   |
| Other liabilities                                                          |   |   | 6,255 |   |   |   | 4,757 |   |
| Regulatory liabilities                                                     |   |   | 106 |   |   |   | 30 |   |
| Asset retirement obligations                                               |   |   | 2,963 |   |   |   | 2,683 |   |
| Leaseback obligations                                                      |   |   | 1,279 |   |   |   | 940 |   |
| Energy prepayment obligations                                              |   |   | 717 |   |   |   | 822 |   |
| Environmental cleanup costs - Kingston ash spill                           |   |   | 305 |   |   |   | 354 |   |
| Total other liabilities                                                    |   |   | 11,625 |   |   |   | 9,586 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Long-term debt, net                                                        |   |   | 22,389 |   |   |   | 21,788 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Total liabilities                                                          |   |   | 37,616 |   |   |   | 35,799 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Commitments and contingencies (Note 20)                                    |   |   |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Proprietary capital                                                        |   |   |   |   |   |   |   |   |
| Appropriation-investment power program                                     |   |   | 328 |   |   |   | 348 |   |
| Retained earnings power program                                            |   |   | 4,264 |   |   |   | 3,291 |   |
| Total power program proprietary capital                                    |   |   | 4,592 |   |   |   | 3,639 |   |
| Appropriation investment nonpower programs, net                            |   |   | 640 |   |   |   | 654 |   |
| Accumulated other comprehensive loss                                       |   |   | (95 | ) |   |   | (75 | ) |
| Total proprietary capital                                                  |   |   | 5,137 |   |   |   | 4,218 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Total liabilities and proprietary capital                                  |   | $ | 42,753 |   |   | $ | 40,017 |   |
| The accompanying notes are an integral part of these financial statements. |   |

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| TENNESSEE VALLEY AUTHORITYSTATEMENTS OF CASH FLOWSFor the years ended September 30(in millions)                                     |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Cash flows from operating activities                                                                                                |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                          |   | $ | 972 |   |   | $ | 726 |   |   | $ | 817 |   |
| Adjustments to reconcile net income to net cash provided by operating activities                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|    Depreciation, amortization, and accretion                                                                         |   |   | 1,743 |   |   |   | 1,618 |   |   |   | 1,244 |   |
|    Nuclear refueling outage amortization                                                                             |   |   | 102 |   |   |   | 122 |   |   |   | 107 |   |
|    Amortization of nuclear fuel                                                                                      |   |   | 238 |   |   |   | 216 |   |   |   | 189 |   |
|    Non-cash retirement benefit expense                                                                               |   |   | 364 |   |   |   | 146 |   |   |   | 145 |   |
|    Prepayment credits applied to revenue                                                                             |   |   | (105 | ) |   |   | (105 | ) |   |   | (105 | ) |
|    Fuel cost adjustment deferral                                                                                     |   |   | (898 | ) |   |   | 850 |   |   |   | 123 |   |
|    Environmental cleanup costs – Kingston ash spill – non cash                                           |   |   | 62 |   |   |   | — |   |   |   | — |   |
| Changes in current assets and liabilities                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|    Accounts receivable, net                                                                                          |   |   | (342 | ) |   |   | 90 |   |   |   | (59 | ) |
|    Inventories and other, net                                                                                        |   |   | (119 | ) |   |   | (182 | ) |   |   | (138 | ) |
|    Accounts payable and accrued liabilities                                                                          |   |   | 237 |   |   |   | 94 |   |   |   | (78 | ) |
|    Accrued interest                                                                                                  |   |   | 6 |   |   |   | (40 | ) |   |   | 35 |   |
| Pension contributions                                                                                                               |   |   | (6 | )  |   |   | (1,005 | ) |   |   | (165 | ) |
| Refueling outage costs                                                                                                              |   |   | — |   |   |   | (128 | ) |   |   | (150 | ) |
| Environmental cleanup costs – Kingston ash spill                                                                              |   |   | (369 | )  |   |   | (231 | ) |   |   | — |   |
| Other, net                                                                                                                          |   |   | 16 |   |   |   | (8 | ) |   |   | 2 |   |
| Net cash provided by operating activities                                                                                           |   |   | 1,901 |   |   |   | 2,163 |   |   |   | 1,967 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction expenditures                                                                                                           |   |   | (2,015 | ) |   |   | (1,793 | ) |   |   | (1,984 | ) |
| Nuclear fuel expenditures                                                                                                           |   |   | (401 | ) |   |   | (432 | ) |   |   | (322 | ) |
| Change in restricted cash and investments                                                                                           |   |   | — |   |   |   | (17 | ) |   |   | 25 |   |
| Purchases of investments                                                                                                            |   |   | (42 | ) |   |   | (42 | ) |   |   | (39 | ) |
| Loans and other receivables                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|       Advances                                                                                        |   |   | (25 | ) |   |   | (13 | ) |   |   | (6 | ) |
|       Repayments                                                                                      |   |   | 21 |   |   |   | 11 |   |   |   | 13 |   |
| Other, net                                                                                                                          |   |   | 4 |   |   |   | (1 | ) |   |   | 4 |   |
| Net cash used in investing activities                                                                                               |   |   | (2,458 | ) |   |   | (2,287 | ) |   |   | (2,309 | ) |
|                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|     Issues                                                                                                      |   |   | 1,679 |   |   |   | 2,369 |   |   |   | 2,105 |   |
|     Redemptions and repurchases                                                                                 |   |   | (69 | ) |   |   | (2,874 | ) |   |   | (689 | ) |
| Short-term debt issues (redemptions), net                                                                                           |   |   | (817 | ) |   |   | 659 |   |   |   | (1,237 | ) |
| Proceeds from sale/leaseback financing                                                                                              |   |   | 11 |   |   |   | 104 |   |   |   | 325 |   |
| Payments on leases and leaseback financing                                                                                          |   |   | (94 | ) |   |   | (79 | ) |   |   | (43 | ) |
| Bond premium received                                                                                                               |   |   | 28 |   |   |   | — |   |   |   | — |   |
| Financing costs, net                                                                                                                |   |   | (23 | ) |   |   | (33 | ) |   |   | (32 | ) |
| Payments to U.S. Treasury                                                                                                           |   |   | (29 | ) |   |   | (33 | ) |   |   | (40 | ) |
| Other                                                                                                                               |   |   | (2 | ) |   |   | (1 | ) |   |   | 1 |   |
| Net cash provided by financing activities                                                                                           |   |   | 684 |   |   |   | 112 |   |   |   | 390 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Net change in cash and cash equivalents                                                                                             |   |   | 127 |   |   |   | (12 | ) |   |   | 48 |   |
| Cash and cash equivalents at beginning of year                                                                                      |   |   | 201 |   |   |   | 213 |   |   |   | 165 |   |
|                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of year                                                                                            |   | $ | 328 |   |   | $ | 201 |   |   | $ | 213 |   |
| See Note 17 for supplemental cash flow information. The accompanying notes are an integral part of these financial statements. |   |

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| TENNESSEE VALLEY AUTHORITYSTATEMENTS OF CHANGES IN PROPRIETARY CAPITALFor the years ended September 30(in millions) |   |
|---------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                |   |   |  Power ProgramAppropriation Investment |   |   |  Power ProgramRetained Earnings |   |   | Nonpower AppropriationInvestment,Net  |   |   | Accumulated Other Comprehensive Income (Loss) |   |   |    Total |   |   |   Comprehensive Income (Loss) |   |
|                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at September 30, 2007                                                                                       |   |   | $ | 388 |   |   | $ | 1,763 |   |   | $ | 672 |   |   | $ | (19 | ) |   | $ | 2,804 |   |   |   |   |   |
| Net income (loss)                                                                                                   |   |   |   | – |   |   |   | 828 |   |   |   | (11 | )  |   |   | – |   |   |   | 817 |   |   | $ | 817 |   |
| Other comprehensive income (loss)                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on future cash flow hedges                                                                      |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | (179 | )  |   |   | (179 | )  |   |   | (179 | )  |
| Reclassification to earnings from cash flow hedges                                                                  |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | 161 |   |   |   | 161 |   |   |   | 161 |   |
| Total other comprehensive income (loss)                                                                             |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | (18  | )  |   |   |  (18 | ) |   |   | (18 | ) |
| Total comprehensive income (loss)                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $  | 799 |   |
| Return on Appropriation Investment                                                                                  |   |   |   | – |   |   |   | (20 | ) |   |   | – |   |   |   | – |   |   |   | (20 | ) |   |   |   |   |
| Return of Appropriation Investment                                                                                  |   |   |   | (20 | ) |   |   | – |   |   |   | – |   |   |   | – |   |   |   | (20 | ) |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at September 30, 2008                                                                                       |   |   | $ | 368 |   |   | $ | 2,571 |   |   | $ | 661 |   |   | $ | (37 | ) |   | $ | 3,563 |   |   |   |   |   |
| Net income (loss)                                                                                                   |   |   |   | – |   |   |   | 733 |   |   |   | (7 | )  |   |   | – |   |   |   | 726 |   |   | $ | 726 |   |
| Other comprehensive income (loss)                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on future cash flow hedges                                                                      |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | (146 | )  |   |   | (146 | ) |   |   | (146 | ) |
| Reclassification to earnings from cash flow hedges                                                                  |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | 108 |   |   |   | 108 |   |   |   |  108 |   |
| Total other comprehensive income (loss)                                                                             |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | (38 | ) |   |   | (38 | )  |   |   | (38 | ) |
| Total comprehensive income (loss)                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 688 |   |
| Return on Appropriation Investment                                                                                  |   |   |   | – |   |   |   | (13 | ) |   |   | – |   |   |   | – |   |   |   | (13 | ) |   |   |   |   |
| Return of Appropriation Investment                                                                                  |   |   |   | (20 | ) |   |   | – |   |   |   | – |   |   |   | – |   |   |   | (20 | ) |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at September 30, 2009                                                                                       |   |   | $ | 348 |   |   | $ | 3,291 |   |   | $ | 654 |   |   | $ | (75 | ) |   | $ | 4,218 |   |   |   |   |   |
| Net income (loss)                                                                                                   |   |   |   | – |   |   |   | 982 |   |   |   | (10 | )  |   |   | – |   |   |   | 972 |   |   | $ | 972 |   |
| Other comprehensive income (loss)                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gain on future cash flow hedges                                                                      |   |   |   | – |   |   |   | –  |   |   |   | –  |   |   |   | (37 | )  |   |   | (37 | )  |   |   |  (37 | ) |
| Reclassification to earnings from cash flow hedges                                                                  |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | 17 |   |   |   | 17 |   |   |   |  17 |   |
| Total other comprehensive income (loss)                                                                             |   |   |   | –  |   |   |   | –  |   |   |   | –  |   |   |   | (20 | )  |   |   |  (20 | )  |   |   | (20 | ) |
| Total comprehensive income (loss)                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $  | 952 |   |
| Return on Appropriation Investment                                                                             |   |   |   | – |   |   |   | (9 | ) |   |   | – |   |   |   | – |   |   |   | (9 | ) |   |   |   |   |
| Return of Appropriation Investment                                                                                  |   |   |   | (20 | ) |   |   | – |   |   |   | (4 | )  |   |   | – |   |   |   | (24 | ) |   |   |   |   |
|                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at September 30, 2010                                                                                       |   |   | $ | 328 |   |   | $ | 4,264 |   |   | $ | 640 |   |   | $ | (95 | ) |   | $ | 5,137 |   |   |   |   |   |
|    The accompanying notes are an integral part of these financial statements.                             |   |

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NOTES TO FINANCIAL STATEMENTS

| Note No. |   |                                                   |   | Page No. |
|----------|--------|--------------------------------------------------------|--------|----------|
| 1        |   | Summary of Significant Accounting Policies             |   | 81       |
| 2        |   | Impact of New Accounting Standards and Interpretations |   | 87       |
| 3        |   | Accounts Receivable                                    |   | 88       |
| 4        |   | Inventories                                            |   | 88       |
| 5        |   | Completed Plant                                        |   | 89       |
| 6        |   | Other Long-Term Assets                                 |   | 89       |
| 7        |   | Regulatory Assets and Liabilities                      |   | 90       |
| 8        |   | Kingston Fossil Plant Ash Spill                        |   | 92       |
| 9        |   | Other Long-Term Liabilities                            |   | 94       |
| 10       |   | Asset Retirement Obligations                           |   | 94       |
| 11       |   | Debt                                                   |   | 95       |
| 12       |   | Seven States Power Corporation Obligation              |   | 100      |
| 13       |   | Risk Management Activities and Derivative Transactions |   | 100      |
| 14       |   | Fair Value Measurements                                |   | 107      |
| 15       |   | Proprietary Capital                                    |   | 112      |
| 16       |   | Other Income (Expense), Net                            |   | 114      |
| 17       |   | Supplemental Cash Flow Information                     |   | 114      |
| 18       |   | Benefit Plans                                          |   | 114      |
| 19       |   | Asset Acquisitions and Dispositions                    |   | 124      |
| 20       |   | Commitments and Contingencies                          |   | 125      |
| 21       |   | Related Parties                                        |   | 132      |
| 22       |   | Unaudited Quarterly Financial Information              |   | 133      |
| 23       |   | Subsequent Event                                       |   | 133      |

1.  Summary of Significant Accounting Policies

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| TVA Property, Plant, and Equipment Depreciation RatesAs of September 30  |
|-------------------------------------------------------------------------------|
|                                                                          | 2010 | 2009 | 2008 |
| Asset Class:                                                                  |   | (percent) |   |
|   Nuclear                                                           | 2.59 | 2.59 | 2.57 |
|   Coal-Fired                                                        | 3.22 | 3.22 | 3.44 |
|   Hydroelectric                                                     | 1.65 | 1.65 | 1.72 |
|   Combustion turbine/diesel generators                              | 4.09 | 4.09 | 4.39 |
|   Transmission                                                      | 3.40 | 3.40 | 2.74 |
|   Other                                                             | 6.03 | 4.91 | 6.38 |

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2.  Impact of New Accounting Standards and Interpretations

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3.  Accounts Receivable

| Accounts ReceivableAs of September 30      |   |
|-------------------------------------------------|--------|
|                                            |   | 2010 |   |   | 2009 |   |
| Power receivables                               |   |   |   |   |   |   |
|       Billed      |   | $ | 597 |   |   | $ | 309 |   |
|       Unbilled    |   |   | 1,004 |   |   |   | 940 |   |
|    Total power receivables       |   |   | 1,601 |   |   |   | 1,249 |   |
|                                            |   |   |   |   |   |   |   |   |
| Other receivables                               |   |   | 40 |   |   |   | 52 |   |
| Allowance for uncollectible accounts            |   | $ | (2 | ) |   | $ | (2 | ) |
|                                            |   |   |   |   |   |   |   |   |
|     Net accounts receivable |   | $ |  1,639 |   |   | $ |  1,299 |   |

4.  Inventories

| InventoriesAs of September 30              |   |
|------------------------------------------------------|--------|
|                                                 |   | At September 30, 2010 |   |   | At September 30,2009 |   |
|                                                 |   |   |   |   |   |   |
| Fuel inventory                                       |   | $ | 539 |   |   | $ | 534 |   |
| Materials and supplies inventory                     |   |   | 486 |   |   |   | 422 |   |
| Emission allowance inventory                         |   |   | 11 |   |   |   | 12 |   |
| Allowance for inventory obsolescence                 |   |   | (24 | ) |   |   | (50 | ) |
|                                                 |   |   |   |   |   |   |   |   |
|       Inventories, net |   | $ | 1,012 |   |   | $ | 918 |   |

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5.  Completed Plant

| TVA Completed PlantAs of September 30 |   |
|---------------------------------------|--------|
|                                  |   |   | 2010 |   |   | 2009 |   |
|                                  |   |   | Cost |   |   | Accumulated Depreciation |   |   | Net |   |   | Cost |   |   | Accumulated Depreciation |   |   | Net |   |
| Coal-Fired                            |   |   | $ | 12,920 |   |   | $ | 6,731 |   |   | $ | 6,189 |   |   | $ | 12,171 |   |   | $ | 6,286 |   |   | $ | 5,885 |   |
| Combustion turbine                    |   |   |   | 2,124 |   |   |   | 737 |   |   |   | 1,387 |   |   |   | 1,653 |   |   |   | 678 |   |   |   | 975 |   |
| Nuclear                               |   |   |   | 17,681 |   |   |   | 7,866 |   |   |   | 9,815 |   |   |   | 17,621 |   |   |   | 7,440 |   |   |   | 10,181 |   |
| Transmission                          |   |   |   | 5,532 |   |   |   | 2,084 |   |   |   | 3,448 |   |   |   | 5,201 |   |   |   | 1,899 |   |   |   | 3,302 |   |
| Hydroelectric                         |   |   |   | 2,193 |   |   |   | 819 |   |   |   | 1,374 |   |   |   | 2,154 |   |   |   | 791 |   |   |   | 1,363 |   |
| Other electrical plant                |   |   |   | 1,575 |   |   |   | 745 |   |   |   | 830 |   |   |   | 1,501 |   |   |   | 657 |   |   |   | 844 |   |
|     Subtotal      |   |   |   | 42,025 |   |   |   | 18,982 |   |   |   | 23,043 |   |   |   | 40,301 |   |   |   | 17,751 |   |   |   | 22,550 |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Multipurpose dams                     |   |   |   | 928 |   |   |   | 331 |   |   |   | 597 |   |   |   | 928 |   |   |   | 323 |   |   |   | 605 |   |
| Other stewardship                     |   |   |   | 44 |   |   |   | 13 |   |   |   | 31 |   |   |   | 44 |   |   |   | 12 |   |   |   | 32 |   |
|     Subtotal      |   |   |   | 972 |   |   |   | 344 |   |   |   | 628 |   |   |   | 972 |   |   |   | 335 |   |   |   | 637 |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                           |   |   | $ | 42,997 |   |   | $ | 19,326 |   |   | $ | 23,671 |   |   | $ | 41,273 |   |   | $ | 18,086 |   |   | $ | 23,187 |   |

6.  Other Long-Term Assets

| Other Long-Term AssetsAs of September 30  |   |
|------------------------------------------------|--------|
|                                           |   |   | 2010 |   |   | 2009 |   |
| Loans and long-term receivables, net           |   |   | $ | 83 |   |   | $ | 81 |   |
| Currency swap assets                           |   |   |   | – |   |   |   | 7 |   |
| Coal contract derivative assets                |   |   |   | 103 |   |   |   | 18 |   |
| Other long-term assets                         |   |   |   | 5 |   |   |   | 4 |   |
|  Total other long-term assets             |   |   | $ | 191 |   |   | $ | 110 |   |

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7.  Regulatory Assets and Liabilities

| TVA Regulatory Assets and LiabilitiesAs of September 30            |   |
|--------------------------------------------------------------------|--------|
|                                                               |   | 2010 |   |   | 2009 |   |
| Current regulatory assets                                          |   |   |   |   |   |   |
| Deferred capital leases                                            |   | $ | 14 |   |   | $ | 15 |   |
| Deferred nuclear generating units                                  |   |   | 391 |   |   |   | 391 |   |
| Deferred outage costs                                              |   |   | 42 |   |   |   | 103 |   |
| Environmental cleanup costs – Kingston ash spill             |   |   | 76 |   |   |   | 62 |   |
| Fuel cost adjustment receivable                                    |   |   | 76 |   |   |   | — |   |
| Fuel cost adjustment tax equivalents                               |   |   | 8 |   |   |   | — |   |
| Unrealized losses on coal contracts                                |   |   | 47 |   |   |   | 44 |   |
| Unrealized losses related to TVA’s Financial Trading Program |   |   | 137 |   |   |   | 69 |   |
|    Total current regulatory assets                  |   |   | 791 |   |   |   | 684 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Non-current regulatory assets                                      |   |   |   |   |   |   |   |   |
| Debt reacquisition costs                                           |   |   | 174 |   |   |   | 195 |   |
| Deferred capital leases                                            |   |   | 10 |   |   |   | 25 |   |
| Deferred nuclear generating units                                  |   |   | 1,565 |   |   |   | 1,956 |   |
| Deferred other post-retirement benefit costs                       |   |   | 255 |   |   |   | 298 |   |
| Deferred outage costs                                              |   |   | — |   |   |   | 42 |   |
| Deferred pension                                                   |   |   | 4,456 |   |   |   | 3,765 |   |
| Environmental cleanup costs – Kingston ash spill             |   |   | 987 |   |   |   | 870 |   |
| Non-nuclear decommissioning                                        |   |   | 410 |   |   |   | 351 |   |
| Nuclear decommissioning                                            |   |   | 898 |   |   |   | 909 |   |
| Nuclear training costs                                             |   |   | 59 |   |   |   | 43 |   |
| Retirement removal costs                                           |   |   | 1 |   |   |   | — |   |
| Unrealized losses on coal contracts                                |   |   | 2 |   |   |   | 26 |   |
| Unrealized losses on swaps and swaptions                           |   |   | 797 |   |   |   | 498 |   |
| Unrealized losses related to TVA’s Financial Trading Program |   |   | 142 |   |   |   | 16 |   |
|    Total non-current regulatory assets              |   |   | 9,756 |   |   |   | 8,994 |   |
|                                                               |   |   |   |   |   |   |   |   |
|    Total regulatory assets                          |   | $ | 10,547 |   |   | $ | 9,678 |   |
|                                                               |   |   |   |   |   |   |   |   |
| Current regulatory liabilities                                     |   |   |   |   |   |   |   |   |
| Capital leases                                                     |   | $ | 6 |   |   | $ | 21 |   |
| Fuel cost adjustment                                               |   |   | — |   |   |   | 822 |   |
| Fuel cost adjustment tax equivalents                               |   |   | — |   |   |   | 81 |   |
| Unrealized gains on coal contract derivatives                      |   |   | 50 |   |   |   | 68 |   |
| Unrealized gains relating to TVA’s Financial Trading Program |   |   | 7 |   |   |   | 11 |   |
|    Total current liabilities                        |   |   | 63 |   |   |   | 1,003 |   |
|  Non-current regulatory liabilities                           |   |   |   |   |   |   |   |   |
| Capital leases                                                     |   |   | — |   |   |   | 5 |   |
| Unrealized gains on coal contract derivatives                      |   |   | 103 |   |   |   | 19 |   |
| Unrealized gains relating to TVA’s Financial Trading Program |   |   | 3 |   |   |   | 6 |   |
|    Total non-current regulatory liabilities         |   |   | 106 |   |   |   | 30 |   |
|                                                               |   |   |   |   |   |   |   |   |
|    Total regulatory liabilities                     |   | $ | 169 |   |   | $ | 1,033 |   |
|                                                               |   |   |   |   |   |   |   |   |

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8.  Kingston Fossil Plant Ash Spill

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9.  Other Long-Term Liabilities

| Other Long-Term LiabilitiesAs of September 30     |   |
|--------------------------------------------------------|--------|
|                                                   |   |   | 2010 |   |   | 2009 |   |
| Currency swap liabilities                              |   |   | $ | 81 |   |   | $ | 51 |   |
| Swaption liability                                     |   |   |   | 804 |   |   |   | 592 |   |
| Interest rate swap liabilities                         |   |   |   | 371 |   |   |   | 287 |   |
| Coal contract derivative liabilities                   |   |   |   | 2 |   |   |   | 26 |   |
| Post-retirement and postemployment benefit obligations |   |   |   | 4,729 |   |   |   | 3,678 |   |
| Commodity swap derivatives              |   |   |   | 118 |   |   |   | — |   |
| Other long-term liability obligations                  |   |   |   | 150 |   |   |   | 123 |   |
|  Total other long-term liabilities                |   |   | $ | 6,255 |   |   | $ | 4,757 |   |

10.  Asset Retirement Obligations

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| Reconciliation of Asset Retirement Obligation LiabilityAs of September 30  |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   |   | 2010 |   |   | 2009 |   |
| Balance at beginning of period                                                  |   |   | $ | 2,683 |   |   | $ | 2,318 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |
|    Changes in nuclear estimates to future cash flows             |   |   |   | — |   |   |   | 11 |   |
|    Non-nuclear additional obligations                            |   |   |   | 1 |   |   |   | 1 |   |
|    Non-nuclear additional obligations (ash storage areas)        |   |   |   | 138 |   |   |   | 224 |   |
|    Non-nuclear settlements (ash storage areas)                   |   |   |   | (6 | )  |   |   | — |   |
|                                                                            |   |   |   |  133 |   |   |   | 236  |   |
| Add:  ARO (accretion) expense                                         |   |   |   |   |   |   |   |   |   |
|    Nuclear accretion (recorded as regulatory asset)              |   |   |   | 104 |   |   |   | 98 |   |
|    Non-nuclear accretion (recorded as regulatory asset)          |   |   |   | 43 |   |   |   | 31 |   |
|                                                                            |   |   |   | 147 |   |   |   | 129 |   |
|                                                                            |   |   |   |   |   |   |   |   |   |
|  Balance at end of period                                                  |   |   | $ | 2,963 |   |   | $ | 2,683 |   |

11.  Debt

| •   | the remainder of TVA’s gross power revenues |
|---------------------|---------------------------------------------------|

| •   | after deducting |
|---------------------|-----------------|

| –   | the costs of operating, maintaining, and administering its power properties, and |
|---------------------|----------------------------------------------------------------------------------|

| –   | payments to states and counties in lieu of taxes, but |
|---------------------|-------------------------------------------------------|

| •   | before deducting depreciation accruals or other charges representing the amortization of capital expenditures, plus |
|---------------------|---------------------------------------------------------------------------------------------------------------------|

| •   | the net proceeds from the sale or other disposition of any power facility or interest therein. |
|---------------------|------------------------------------------------------------------------------------------------|

|   | • | the depreciation accruals and other charges representing the amortization of capital expenditures and |
|--------|---------|-------------------------------------------------------------------------------------------------------|

|   | • | the net proceeds from any disposition of power facilities |
|--------|---------|-----------------------------------------------------------|

|   | for either |
|--------|------------|

|   | • | the reduction of its capital obligations (including Bonds and the Power Program Appropriation Investment) or |
|--------|---------|--------------------------------------------------------------------------------------------------------------|

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|   | • | investment in power assets. |
|--------|---------|-----------------------------|

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| Debt Securities Activity from October 1, 2009 to September 30, 2010  |   |
|---------------------------------------------------------------------------|--------|
| Redemptions/Maturities:                                                   |   |   | 2010 |   |   | 2009 |   |
|    electronotes®                                      |   |   |   |   |   |   |   |
|       First quarter                         |   |   | $ | 1 |   |   | $ | — |   |
|       Second quarter                        |   |   |   | 25 |   |   |   | 558 |   |
|       Third quarter                         |   |   |   | 3 |   |   |   | 3 |   |
|       Fourth quarter                        |   |   |   | 34 |   |   |   | 248 |   |
|    1998 Series G                                           |   |   |   | — |   |   |   | 2,000 |   |
|    1999 Series A                                           |   |   |   | — |   |   |   | 25 |   |
|    2009 Series A                                           |   |   |   | 3 |   |   |   | 1 |   |
|    1998 Series D                                           |   |   |   | — |   |   |   | 20 |   |
|    2009 Series B                                           |   |   |   | 3 |   |   |   | 19 |   |
| Total                                                                     |   |   | $ | 69 |   |   | $ | 2,874 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |
| Issues:                                                                   |   |   |   |   |   |   |   |   |   |
|    electronotes®                                      |   |   |   |   |   |   |   |   |   |
|       First quarter                         |   |   | $ | 82 |   |   | $ | 39 |   |
|       Second quarter                        |   |   |   | 34 |   |   |   | 89 |   |
|       Third quarter                         |   |   |   | 63 |   |   |   | 115 |   |
|       Fourth quarter                        |   |   |   | — |   |   |   | 135 |   |
|    2009 Series A                                           |   |   |   | — |   |   |   | 22 |   |
|    2009 Series B                                           |   |   |   | — |   |   |   | 469 |   |
|    2009 Series C                                                |   |   |   |  500 |   |   |   |  1,500 |   |
|    2010 Series A                                                |   |   |   |  1,000 |   |   |   | —  |   |
|  Total                                                               |   |   | $ | 1,679 |   |   | $ | 2,369 |   |

| Short-Term DebtAs of September 30                                  |
|-------------------------------------------------------------------------|
|  CUSIP or Other Identifier                                         |  Maturity | Call/(Put) Date | Coupon Rate |   | 2010Par Amount |   | 2009Par Amount |
| Discount Notes (net of discount)                                        |   |   |   |   | $                  27 |   | $            844 |
| Current maturities of long-term debt                                    |   |   |   |   |   |   |   |
| 880591DN9                                                               | 01/18/2011 |   | 5.63% |   | 1,000 |   | — |
| 880591EE8                                                               | 05/15/2011 |   | 2.25% |   | 3 |   | 3 |
| 88059TEL1                                                               | 05/15/2011 |   | 2.65% |   | 3 |   | 3 |
| 880591EF5                                                               | 06/15/2011 |   | 3.77% |   | 2 |   | 2 |
|                                                                    |   |   |   |   | 1,008 |   | 8 |
|                                                                    |   |   |   |   |   |   |   |
|       Total debt due within one year, net |   |   |   |   | $             1,035 |   | $           852 |
|                                                                    |   |

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Table of Contents

|  Long-Term Debt(1)As of September 30      |           |
|------------------------------------------------|----------------|
|  CUSIP or Other Identifier                |  Maturity | Call/(Put)Date |   | CouponRate |   |   | 2010Par Amount |   |   | 2009Par Amount |   |
| 880591EE8                                      | 11/15/2010     |   |   |   | 2.250 | % |   | $ | — |   |   | $ | 2 |   |
| 88059TEL1                                      | 11/15/2010     |   |   |   | 2.650 | % |   |   | — |   |   |   | 1 |   |
| 880591EF5                                      | 12/15/2010     |   |   |   | 3.770 | % |   |   | — |   |   |   | 1 |   |
| 880591DN9                                      | 01/18/2011     |   |   |   | 5.625 | % |   |   | — |   |   |   | 1,000 |   |
| 880591EE8                                      | 05/15/2011     |   |   |   | 2.250 | % |   |   | — |   |   |   | 2 |   |
| 88059TEL1                                      | 05/15/2011     |   |   |   | 2.650 | % |   |   | — |   |   |   | 1 |   |
| 880591EF5                                      | 06/15/2011     |   |   |   | 3.770 | % |   |   | — |   |   |   | 1 |   |
|      Maturing in 2011 |           |   |   |   |   |   |   |   | — |   |   |   | 1,008 |   |
|                                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 880591EE8                                      | 11/15/2011     |   |   |   | 2.250 | % |   |   | 2 |   |   |   | 2 |   |
| 88059TEL1                                      | 11/15/2011     |   |   |   | 2.650 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EF5                                      | 12/15/2011     |   |   |   | 3.770 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EE8                                      | 05/15/2012     |   |   |   | 2.250 | % |   |   | 2 |   |   |   | 2 |   |
| 88059TEL1                                      | 05/15/2012     |   |   |   | 2.650 | % |   |   | 1 |   |   |   | 1 |   |
| 880591DL3                                      | 05/23/2012     |   |   |   | 7.140 | % |   |   | 29 |   |   |   | 29 |   |
| 880591DT6                                      | 05/23/2012     |   |   |   | 6.790 | % |   |   | 1,486 |   |   |   | 1,486 |   |
| 880591EF5                                      | 06/15/2012     |   |   |   | 3.770 | % |   |   | 1 |   |   |   | 1 |   |
|      Maturing in 2012 |           |   |   |   |   |   |   |   | 1,523 |   |   |   | 1,523 |   |
|                                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 880591EE8                                      | 11/15/2012     |   |   |   | 2.250 | % |   |   | 2 |   |   |   | 2 |   |
| 88059TEL1                                      | 11/15/2012     |   |   |   | 2.650 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EF5                                      | 12/15/2012     |   |   |   | 3.770 | % |   |   | 1 |   |   |   | 1 |   |
| 880591CW0                                      | 03/15/2013     |   |   |   | 6.000 | % |   |   | 1,359 |   |   |   | 1,359 |   |
| 880591EE8                                      | 05/15/2013     |   |   |   | 2.250 | % |   |   | 2 |   |   |   | 2 |   |
| 88059TEL1                                      | 05/15/2013     |   |   |   | 2.650 | % |   |   | 2 |   |   |   | 2 |   |
| 880591EF5                                      | 06/15/2013     |   |   |   | 3.770 | % |   |   | 1 |   |   |   | 1 |   |
| 880591DW9                                      | 08/01/2013     |   |   |   | 4.750 | % |   |   | 940 |   |   |   | 940 |   |
|      Maturing in 2013 |           |   |   |   |   |   |   |   | 2,308 |   |   |   | 2,308 |   |
|                                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 880591EE8                                      | 11/15/2013     |   |   |   | 2.250 | % |   |   | 2 |   |   |   | 2 |   |
| 88059TEL1                                      | 11/15/2013     |   |   |   | 2.650 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EF5                                      | 12/15/2013     |   |   |   | 3.770 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EE8                                      | 05/15/2014     |   |   |   | 2.250 | % |   |   | 1 |   |   |   | 1 |   |
| 88059TEL1                                      | 05/15/2014     |   |   |   | 2.650 | % |   |   | 2 |   |   |   | 2 |   |
| 880591EF5                                      | 06/15/2014     |   |   |   | 3.770 | % |   |   | 25 |   |   |   | 25 |   |
|      Maturing in 2014 |           |   |   |   |   |   |   |   | 32 |   |   |   | 32 |   |
|                                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 880591EE8                                      | 11/15/2014     |   |   |   | 2.250 | % |   |   | 2 |   |   |   | 2 |   |
| 88059TEL1                                      | 11/15/2014     |   |   |   | 2.650 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EF5                                      | 12/15/2014     |   |   |   | 3.770 | % |   |   | 1 |   |   |   | 1 |   |
| 880591EE8                                      | 05/15/2015     |   |   |   | 2.250 | % |   |   | 1 |   |   |   | 1 |   |
| 88059TEL1                                      | 05/15/2015     |   |   |   | 2.650 | % |   |   | 1 |   |   |   | 1 |   |
| 880591DY5                                      | 06/15/2015     |   |   |   | 4.375 | % |   |   | 1,000 |   |   |   | 1,000 |   |
| 880591EF5                                      | 06/15/2015     |   |   |   | 3.770 | % |   |   | 26 |   |   |   | 26 |   |
|      Maturing in 2015 |           |   |   |   |   |   |   |   | 1,032 |   |   |   | 1,032 |   |
|                                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|  CUSIP or Other Identifier |  Maturity | Call/(Put)Date |   | Coupon Rate |   |   | 2010Par Amount |   |    | 2009Par Amount |   |
|---------------------------------|----------------|----------------|--------|-------------|--------|--------|----------------|--------|---------|----------------|--------|
| 880591EE8                       | 11/15/2015     |           |   |        | 2.250  | %      |           |   | 2       |           |   |   | 2 |   |
| 88059TEL1                       | 11/15/2015     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 12/15/2015     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TEL1                       | 05/15/2016     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 06/15/2016     |           |   |        | 3.770  | %      |           |   | 26      |           |   |   | 26 |   |
| 88059TEL1                       | 11/15/2016     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591DS8                       | 12/15/2016     |           |   |        | 4.875  | %      |           |   | 524     |           |   |   | 524 |   |
| 880591EF5                       | 12/15/2016     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TEL1                       | 05/15/2017     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 06/15/2017     |           |   |        | 3.770  | %      |           |   | 27      |           |   |   | 27 |   |
| 880591EA6                       | 07/18/2017     |           |   |        | 5.500  | %      |           |   | 1,000   |           |   |   | 1,000 |   |
| 88059TEL1                       | 11/15/2017     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591CU4                       | 12/15/2017     |           |   |        | 6.250  | %      |           |   | 650     |           |   |   | 650 |   |
| 880591EF5                       | 12/15/2017     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TEF4                       | 03/15/2018     | 03/15/2010     |   |        | 4.500  | %      |           |   | — |           |   |   | 25 |   |
| 880591EC2                       | 04/01/2018     |           |   |        | 4.500  | %      |           |   | 1,000   |           |   |   | 1,000 |   |
| 88059TEL1                       | 05/15/2018     |           |   |        | 2.650  | %      |           |   | 2       |           |   |   | 2 |   |
| 880591EF5                       | 06/15/2018     |           |   |        | 3.770  | %      |           |   | 28      |           |   |   | 28 |   |
| 88059TEL1                       | 11/15/2018     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 12/15/2018     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TCX7                       | 03/15/2019     | 01/15/2005     |   |        | 4.500  | %      |           |   | — |           |   |   | 12 |   |
| 88059TEL1                       | 05/15/2019     |           |   |        | 2.650  | %      |           |   | 2       |           |   |   | 1 |   |
| 880591EF5                       | 06/15/2019     |           |   |        | 3.770  | %      |           |   | 29      |           |   |   | 29 |   |
| 88059TEL1                       | 11/15/2019     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 12/15/2019     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TEY3                       | 02/15/2020     | 02/15/2012     |   |        | 3.750  | %      |           |   | 12      |           |   |   | — |   |
| 88059TFA4                       | 04/15/2020     | 04/15/2012     |   |        | 4.100  | %      |           |   | 39      |           |   |   | — |   |
| 88059TEL1                       | 05/15/2020     |           |   |        | 2.650  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 06/15/2020     |           |   |        | 3.770  | %      |           |   | 27      |           |   |   | 27 |   |
| 88059TDG3                       | 09/15/2020     | 09/15/2008     |   |        | 4.800  | %      |           |   | — |           |   |   | 3 |   |
| 880591EF5                       | 12/15/2020     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591DC3                       | 06/07/2021     |           |   |        | 5.805  | %      |           |   | 314     |           |   |   | 320 |   |
| 880591EF5                       | 06/15/2021     |           |   |        | 3.770  | %      |           |   | 28      |           |   |   | 28 |   |
| 880591EF5                       | 12/15/2021     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 06/15/2022     |           |   |        | 3.770  | %      |           |   | 28      |           |   |   | 28 |   |
| 880591EF5                       | 12/15/2022     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 880591EF5                       | 06/15/2023     |           |   |        | 3.770  | %      |           |   | 28      |           |   |   | 28 |   |
| 88059TEH0                       | 10/15/2023     | 10/15/2011     |   |        | 5.000  | %      |           |   | 14      |           |   |   | 15 |   |
| 880591EF5                       | 12/15/2023     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TEM9                       | 03/15/2024     | 03/15/2012     |   |        | 4.500  | %      |           |   | 58      |           |   |   | 59 |   |
| 880591EF5                       | 06/15/2024     |           |   |        | 3.770  | %      |           |   | 21      |           |   |   | 21 |   |
| 88059TES6                       | 07/15/2024     | 07/15/2012     |   |        | 4.875  | %      |           |   | 28      |           |   |   | 28 |   |
| 880591EF5                       | 12/15/2024     |           |   |        | 3.770  | %      |           |   | 1       |           |   |   | 1 |   |
| 88059TEZ0                       | 03/15/2025     | 03/15/2013     |   |        | 4.300  | %      |           |   | 22      |           |   |   | — |   |
| 88059TFB2                       | 05/15/2025     | 05/15/2013     |   |        | 4.250  | %      |           |   | 23      |           |   |   | — |   |
| 88059TDC2                       | 05/15/2025     | 05/15/2009     |   |        | 5.125  | %      |           |   | — |           |   |   | 13 |   |
| 880591EF5                       | 06/15/2025     |           |   |        | 3.770  | %      |           |   | 22      |           |   |   | 22 |   |
| 880591CJ9                       | 11/01/2025     |           |   |        | 6.750  | %      |           |   | 1,350   |           |   |   | 1,350 |   |

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Table of Contents

| CUSIP or Other Identifier                                                                                                                                                                                                                                                                                                                     |   |  Maturity | Call/(Put)Date |   | Coupon Rate |   |   | 2010Par Amount |   |    | 2009Par Amount |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|----------------|--------|-------------|--------|--------|----------------|--------|---------|----------------|--------|
| 88059TDM0                                                                                                                                                                                                                                                                                                                                     |   | 02/15/2026     | 02/15/2010     |   |        | 5.500  | %      |           |   | — |           |   |   | 6 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2026     |           |   |        | 3.770  | %      |           |   | 20      |           |   |   | 20 |   |
| 88059TDV0                                                                                                                                                                                                                                                                                                                                     |   | 10/15/2026     | 10/15/2010     |   |        | 5.500  | %      |           |   | 9       |           |   |   | 9 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2027     |           |   |        | 3.770  | %      |           |   | 20      |           |   |   | 20 |   |
| 88059TEE7                                                                                                                                                                                                                                                                                                                                     |   | 01/15/2028     | 01/15/2012     |   |        | 4.750  | %      |           |   | 36      |           |   |   | 36 |   |
| 880591300                                                                                                                                                                                                                                                                                                                                     | (3)    | 06/01/2028     |           |   |        | 4.728  | %      |           |   | 330     |           |   |   | 330 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2028     |           |   |        | 3.770  | %      |           |   | 16      |           |   |   | 16 |   |
| 88059TEJ6                                                                                                                                                                                                                                                                                                                                     |   | 11/15/2008     | 11/15/2012     |   |        | 5.250  | %      |           |   | 7       |           |   |   | 7 |   |
| 88059TEK3                                                                                                                                                                                                                                                                                                                                     |   | 12/15/2028     | 12/15/2012     |   |        | 5.000  | %      |           |   | 17      |           |   |   | 18 |   |
| 88059TEP2                                                                                                                                                                                                                                                                                                                                     |   | 04/15/2029     | 04/15/2013     |   |        | 4.350  | %      |           |   | 51      |           |   |   | 51 |   |
|  880591409                                                                                                                                                                                                                                                                                                                               | (3)    | 05/01/2029     |           |   |        | 4.500  | %      |           |   | 274     |           |   |   | 274 |   |
| 88059TEQ0                                                                                                                                                                                                                                                                                                                                     |   | 05/15/2029     | 05/15/2013     |   |        | 4.500  | %      |           |   | 50      |           |   |   | 50 |   |
| 88059TER8                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2029     | 06/15/2013     |   |        | 4.750  | %      |           |   | 13      |           |   |   | 13 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2029     |           |   |        | 3.770  | %      |           |   | 12      |           |   |   | 12 |   |
| 88059TET4                                                                                                                                                                                                                                                                                                                                     |   | 07/15/2029     | 07/15/2013     |   |        | 4.750  | %      |           |   | 37      |           |   |   | 37 |   |
| 88059TEV9                                                                                                                                                                                                                                                                                                                                     |   | 08/15/2029     | 08/15/2013     |   |        | 4.875  | %      |           |   | 19      |           |   |   | 19 |   |
| 88059TEW7                                                                                                                                                                                                                                                                                                                                     |   | 09/15/2029     | 09/15/2013     |   |        | 4.750  | %      |           |   | 51      |           |   |   | 51 |   |
| 88059TEX5                                                                                                                                                                                                                                                                                                                                     |   | 10/15/2029     | 10/15/2013     |   |        | 4.375  | %      |           |   | 82      |           |   |   | — |   |
| 880591DM1                                                                                                                                                                                                                                                                                                                                     |   | 05/01/2030     |           |   |        | 7.125  | %      |           |   | 1,000   |           |   |   | 1,000 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2030     |           |   |        | 3.770  | %      |           |   | 12      |           |   |   | 12 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2031     |           |   |        | 3.770  | %      |           |   | 12      |           |   |   | 12 |   |
| 880591DP4                                                                                                                                                                                                                                                                                                                                     |   | 06/07/2032     |           |   |        | 6.587  | %      |           |   | 393     |           |   |   | 399 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2032     |           |   |        | 3.770  | %      |           |   | 12      |           |   |   | 12 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2033     |           |   |        | 3.770  | %      |           |   | 5       |           |   |   | 5 |   |
| 880591DV1                                                                                                                                                                                                                                                                                                                                     |   | 07/15/2033     |           |   |        | 4.700  | %      |           |   | 472     |           |   |   | 472 |   |
| 880591EF5                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2034     |           |   |        | 3.770  | %      |           |   | 5       |           |   |   | 5 |   |
| 880591DX7                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2035     |           |   |        | 4.650  | %      |           |   | 436     |           |   |   | 436 |   |
| 880591CK6                                                                                                                                                                                                                                                                                                                                     |   | 04/01/2036     |           |   |        | 5.980  | %      |           |   | 121     |           |   |   | 121 |   |
| 880591CS9                                                                                                                                                                                                                                                                                                                                     |   | 04/01/2036     |           |   |        | 5.880  | %      |           |   | 1,500   |           |   |   | 1,500 |   |
| 880591CP5                                                                                                                                                                                                                                                                                                                                     |   | 01/15/2038     |           |   |        | 6.150  | %      |           |   | 1,000   |           |   |   | 1,000 |   |
| 880591ED0                                                                                                                                                                                                                                                                                                                                     |   | 06/15/2038     |           |   |        | 5.500  | %      |           |   | 500     |           |   |   | 500 |   |
| 880591EH1                                                                                                                                                                                                                                                                                                                                     |   | 09/15/2039     |           |   |        | 5.250  | %      |           |   | 2,000   |           |   |   | 1,500 |   |
| 880591BL5                                                                                                                                                                                                                                                                                                                                     |   | 04/15/2042     | 04/15/2012     |   |        | 8.250  | %      |           |   | 1,000   |           |   |   | 1,000 |   |
| 880591DU3                                                                                                                                                                                                                                                                                                                                     |   | 06/07/2043     |           |   |        | 4.962  | %      |           |   | 236     |           |   |   | 240 |   |
| 880591CF7                                                                                                                                                                                                                                                                                                                                     |   | 07/15/2045     | 07/15/2020     |   |        | 6.235  | %      |           |   | 140     |           |   |   | 140 |   |
| 880591EB4                                                                                                                                                                                                                                                                                                                                     |   | 01/15/2048     |           |   |        | 4.875  | %      |           |   | 500     |           |   |   | 500 |   |
| 880591DZ2                                                                                                                                                                                                                                                                                                                                     |   | 04/01/2056     |           |   |        | 5.375  | %      |           |   | 1,000   |           |   |   | 1,000 |   |
| 880591EJ7                                                                                                                                                                                                                                                                                                                                     |   | 09/15/2060     |           |   |        | 4.625  | %      |           |   | 1,000   |           |   |   | — |   |
| Maturing 2015-2056                                                                                                                                                                                                                                                                                                                            |   |           |           |   |        |   |   |           |   | 17,710  |           |   |   | 16,109 |   |
| Subtotal                                                                                                                                                                                                                                                                                                                                      |   |           |           |   |        |   |   |           |   | 22,605  |           |   |   | 22,012 |   |
| Unamortized discounts, premiums, and other                                                                                                                                                                                                                                                                                                    |   |           |           |   |        |   |   |           |   | (216    | )              |   |   | (224 | ) |
|     Total long-term debt, net                                                                                                                                                                                                                                                                                                       |   |           |           |   |        |   |   |           | $      | 22,389  |           |   | $ | 21,788 |   |
|  Notes(1) The above table includes net exchange losses from currency transactions of $14 million at September 30, 2010.(2) The coupon rate represents TVA’s effective interest rate.(3) TVA PARRS, CUSIP numbers 880591300 and 880591409, may be redeemed under certain conditions.  See Put and Call Options. |   |

12.  Seven States Power Corporation Obligation

13.  Risk Management Activities and Derivative Transactions

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| Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 1)  |
|------------------------------------------------------------------------------------------|
| Derivatives in Cash Flow Hedging Relationship                                            |   | Objective of Hedge Transaction |   | Accounting for Derivative Hedging Instrument |   | Amount of Mark-to-Market (Loss) Gain Recognized in OtherComprehensive Income (Loss) (“OCI”) Years EndedSeptember 30 |
|                                                                                     |   |   |   |   |   | 2010 |   | 2009 |
|                                                                                     |   |   |   |   |   |   |   |   |
| Currency swaps                                                                           |   | To protect against changes in cash flows caused by changes in foreign currency exchange rates (exchange rate risk) |   | Cumulative unrealized gains and losses are recorded in OCI and reclassified to interest expense to the extent they are offset by cumulative gains and losses on the hedged transaction |   |  $   (37) |   |  $  (146) |

| Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2)                                                                       |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Derivatives in Cash FlowHedging Relationship                                                                                                                  |   |   | Amount of Cumulative UnrealizedGain (Loss) Reclassified fromOCI to Interest ExpenseYears EndedSeptember 30 (1) |   |
|                                                                                                                                                          |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                          |   |   |   |   |   |   |   |
| Currency swaps                                                                                                                                                |   |   | $ | 17 |   |   | $ | 108 |   |
|  Note(1) There were no ineffective portions or amounts excluded from effectiveness testing for any of the periods presented. Also see Note 14. |   |

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| Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Derivative Type                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Objective of Derivative |   | Accounting for Derivative Instrument |   | Amount of Gain(Loss) Recognized inIncome on DerivativesYears EndedSeptember 30 (1) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   | 2010 |   | 2009 |
|  Swaption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  To protect against decreases in value of the embedded call (interest rate risk) |   |  Gains and losses are recorded as regulatory assets or liabilities until settlement, at which time the gains/losses (if any) are recognized in gain/loss on derivative contracts. |   | $    — |   | $     — |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
|  Interest rate swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |  To fix short-term debt variable rate to a fixed rate (interest rate risk) |   |  Gains and losses are recorded as regulatory assets or liabilities until settlement, at which time the gains/losses (if any) are recognized in gain/loss on derivative contracts. (2)  |   |       — |   |         — |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
|  Coal contracts with volume options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  To protect against fluctuations in market prices of purchased coal (price risk) |   |  Gains and losses are recorded as regulatory assets or liabilities.  They are recognized in fuel and purchased power expense when the related coal is used in production.  (3) |   |                   —         |   |           (37) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |
|  Commodity derivativesunder Financial Trading Program                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  To protect against fluctuations in market prices of purchased commodities (price risk) |   |  Realized gains and losses are recorded in earnings as fuel and purchased power expense.  Unrealized gains and losses are recorded as a regulatory asset/liability.  |   |     (137) |   |           (408) |
|  Note(1)  All of TVA’s derivative instruments that do not receive hedge accounting treatment have unrealized gains (losses) that would otherwise be recognized in income but instead are deferred as regulatory assets and liabilities.  As such, there was no related gain (loss) recognized in income for these unrealized gains (losses) for 2009 and 2010.  See Note 7 — Deferred Gains and Losses Relating to TVA’s Financial Trading Program, Swap and Swaption Contract, and Unrealized Gains (Losses) on Coal Contacts with Volume Options.(2) Generally, TVA maintains a level of outstanding discount notes equal to or greater than the notional amount of the interest rate swaps.  However, in September 2010, TVA issued $1 billion of long-term Bonds in anticipation of the January 2011 maturity of the $1 billion 2001 Series A Bonds.  As a result of this Bond issuance, TVA paid down its discount notes which caused the discount note balance outstanding at September 30, 2010 to be below the notional amount of the interest rate swaps.There is no statement of operations impact of this due to the use of regulatory accounting for these items. (3)  Settlement fees associated with early contract termination are recognized in fuel and purchased power expense in the period incurred.  Settlement fees with early contract terminations that qualify for regulatory accounting are recorded as regulatory assets.  |

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| MARK-TO-MARKET VALUES OF TVA DERIVATIVESAs of September 30                                                                                                                                                                                                                                                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                              |   | 2010 |   | 2009 |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Derivatives That Receive Hedge Accounting Treatment:                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                              |   | Balance |   | Balance Sheet Presentation |   | Balance |   | Balance Sheet Presentation |
| Currency swaps:                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |
|  £200 million Sterling                                                                                                                                                                                                                                                                                                                                                  |   | $ | (42 | ) | Other long-term liabilities |   | $ | (33 | ) | Other long-term liabilities |
|  £250 million Sterling                                                                                                                                                                                                                                                                                                                                                  |   |   | (5 | ) | Other long-term liabilities |   |   | 7 |   | Other long-term assets |
|  £150 million Sterling                                                                                                                                                                                                                                                                                                                                                  |   |   | (34 | ) | Other long-term liabilities |   |   | (18 | ) | Other long-term liabilities |
|                                                                                                                                                                                                                                                                                                                                                                              |
| Derivatives that Do Not Receive Hedge Accounting Treatment:                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                              |   | Balance |   | Balance Sheet Presentation |   | Balance |   | Balance Sheet Presentation |
|  Swaption:                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|  $1.0 billion notional                                                                                                                                                                                                                                                                                                                                                       |   | $ | (804 | ) | Other long-term liabilities |   | $ | (592 | ) | Other long-term liabilities |
|                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Interest rate swaps:                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| $476 million notional                                                                                                                                                                                                                                                                                                                                                             |   |   | (356 | ) | Other long-term liabilities |   |   | (276 | ) | Other long-term liabilities |
| $42 million notional                                                                                                                                                                                                                                                                                                                                                              |   |   | (15 | ) | Other long-term liabilities |   |   | (11 | ) | Other long-term liabilities |
| Coal contracts derivatives                                                                                                                                                                                                                                                                                                                                    |   |   | 103     |     |     Other long-term assets $103, Other current assets $49; Other long-term liabilities ($2); Accounts payable and accrued liabilities ($47)  |   |   | 7     |   |     Other long-term assets $18, Other current assets $68; Other long-term liabilities ($25); Accounts payable and accrued liabilities ($54)  |
|                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Commodity derivatives under Financial Trading Program:                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Margin cash account*                                                                                                                                                                                                                                                                                                                                                              |   |   | 12 |   |       Other current assets |   |   | 28 |   |        Other current assets |
| Unrealized losses, net                                                                                                                                                                                                                                                                                                                                             |   |   | (269    | )    |     Current regulatory assets ($137); Regulatory assets ($142); Current regulatory liabilities $7; Regulatory liabilities $3  |   |   | (68    | )    |   Current regulatory assets ($69); Regulatory assets ($16); Current regulaotry liabilities $11; Regulatory liabilities $6  |
|  Note* In accordance with certain credit terms, TVA used leveraging to trade financial instruments under the Financial Trading Program. Therefore, the margin cashaccount balance does not represent 100 percent of the net market value of the derivative positions outstanding as shown in the Commodity Derivatives UnderFinancial Trading Program table below. |

|  Currency Swaps OutstandingAs of September 30, 2010  |
|----------------------------------------------------------------|
| Effective Date of Currency Swap Contract                       | Associated TVA Bond Issues – Currency Exposure | Expiration Date of Swap | Overall EffectiveCost to TVA |
| 2003                                                           | £150 million | 2043 | 4.96% |
| 2001                                                           | £250 million | 2032 | 6.59% |
| 1999                                                           | £200 million | 2021 | 5.81% |

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|   | • | In 2003, TVA monetized the call provisions on a $1.0 billion Bond issue by entering into a swaption agreement with a third party in exchange for $175 million (the “2003A Swaption”). |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | In 2003, TVA also monetized the call provisions on a $476 million Bond issue by entering into a swaption agreement with a third party in exchange for $81 million (the “2003B Swaption”). |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | In 2005, TVA monetized the call provisions on two electronotes® issues ($42 million total par value) by entering into swaption agreements with a third party in exchange for $5 million (the “2005 Swaptions”). |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                      | Coal Contract DerivativesAs of September 30  |
|---------------------------|---------------------------------------------------|
|                      | 2010                                              |   | 2009 |
|                      | Number ofContracts                                | Notional Amount(in tons) | Fair Value (MtM) (in millions) |   | Number of Contracts | Notional Amount(in tons) | Fair Value (MtM) (in millions) |
|                      |                                              |   |   |   |   |   |   |
| Coal Contract Derivatives | 11                                                | 27 million | $         103 |   | 7 | 29 million | $        7 |

| Commodity Derivatives Under Financial Trading ProgramAs of September 30                                                                                                                                                                                                                      |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                              |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                                                              |   | NotionalAmount |   |   | Fair Value (MtM)(in millions) |   |   | NotionalAmount |   |   | Fair Value (MtM)(in millions) |   |
|                                                                                                                                                                                                                                                                                              |
| Natural gas (mmBtu)                                                                                                                                                                                                                                                                               |   |   |   |
|                                                                                                                                                                                                                                                                                              |   |   |   |
| Futures contracts                                                                                                                                                                                                                                                                                 |   |   | 7,920,000 |   |   | $ | (21 | ) |   |   | 30,020,000 |   |   | $ | (25 | ) |
| Swap contracts                                                                                                                                                                                                                                                                                    |   |   | 137,110,000 |   |   |   | (241 | ) |   |   | 115,307,500 |   |   |   | (36 | ) |
| Option contracts                                                                                                                                                                                                                                                                                  |   |   | 5,250,000 |   |   |   | (2 | )  |   |   | 7,300,000 |   |   |   | 1 |   |
|                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Natural gas financial positions                                                                                                                                                                                                                                                             |   |   | 150,280,000 |   |   | $ | (264 | ) |   |   | 152,627,500 |   |   | $ | (60 | ) |
|                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel oil/crude oil (in barrels)                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Futures contracts                                                                                                                                                                                                                                                                                 |   |   | 125,000 |   |   | $ | 2 |   |   |   | 398,000 |   |   | $ | 3 |   |
| Swap contracts                                                                                                                                                                                                                                                                                    |   |   | 1,711,000 |   |   |   | 8 |   |   |   | 1,660,000 |   |   |   | 7 |   |
| Option contracts                                                                                                                                                                                                                                                                                  |   |   | 495,000 |   |   |   | — |   |   |   | 1,236,000 |   |   |   | 3 |   |
| Fuel oil/crude oil  financial positions                                                                                                                                                                                                                                                 |   |   | 2,331,000 |   |   | $ | 10 |   |   |   | 3,294,000 |   |   | $ | 13 |   |
|  NoteDue to the right of setoff and method of settlement, TVA elects to record commodity derivatives under the FTP based on its net commodity position with the broker or other counterparty. Notional amounts disclosed represent the net absolute value of contractual amounts.  |   |

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|   | • | If TVA remains a majority-owned U.S. government entity but S&P or Moody’s Investor Service (“Moody’s”) downgrades TVA’s credit rating to AA+/Aa1, TVA would be required to post an additional $120 million of collateral in excess of its September 30, 2010 obligation; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | If TVA ceases to be majority-owned by the U.S. government, its credit rating would likely change and TVA would be required to post additional collateral. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

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14.  Fair Value Measurements

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| Level 1       | —       |   | Unadjusted quoted prices in active markets accessible by the reporting entity for identical assets or liabilities.  Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing.                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------|---------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Level 2  | —  |   | Pricing inputs other than quoted market prices included in Level 1 that are based on observable market data and that are directly or indirectly observable for substantially the full term of the asset or liability.  These include quoted market prices for similar assets or liabilities, quoted market prices for identical or similar assets in markets that are not active, adjusted quoted market prices, inputs from observable data such as interest rate and yield curves, volatilities and default rates observable at commonly quoted intervals, and inputs derived from observable market data by correlation or other means.                                                                |
| Level 3       | —  |   | Pricing inputs that are unobservable, or less observable, from objective sources.  Unobservable inputs are only to be used to the extent observable inputs are not available.  These inputs maintain the concept of an exit price from the perspective of a market participant and should reflect assumptions of other market participants.  An entity should consider all market participant assumptions that are available without unreasonable cost and effort.  These are given the lowest priority and are generally used in internally developed methodologies to generate management's best estimate of the fair value when no observable market data is available.  |

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| Fair Value MeasurementsAs of September 30, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Quoted Prices in Active Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | Netting(1) |   |   | Total |   |
| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $ | 96 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 96 |   |
| Debt securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S. government corporations and agencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 136 |   |   |   | 57 |   |   |   | — |   |   |   | — |   |   |   | 193 |   |
| Corporate debt securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | — |   |   |   | 193 |   |   |   | — |   |   |   | — |   |   |   | 193 |   |
| Residential mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | — |   |   |   | 22 |   |   |   | — |   |   |   | — |   |   |   | 22 |   |
|     Commercial mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | — |   |   |   | 2 |   |   |   | — |   |   |   | — |   |   |   | 2 |   |
| Collateralized debt obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | — |   |   |   | 3 |   |   |   | — |   |   |   | — |   |   |   | 3 |   |
| Commingled funds(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity security commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | — |   |   |   | 340 |   |   |   | — |   |   |   | — |   |   |   | 340 |   |
| Debt security commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | — |   |   |   | 209 |   |   |   | — |   |   |   | — |   |   |   | 209 |   |
| Foreign currency commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | — |   |   |   | 12 |   |   |   | — |   |   |   | — |   |   |   | 12 |   |
| Other commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | — |   |   |   | 45 |   |   |   | — |   |   |   | — |   |   |   | 45 |   |
| Private partnerships                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | — |   |   |   | — |   |   |   |  13 |   |   |   | — |   |   |   |  13 |   |
| Total investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 232 |   |   |   | 883 |   |   |   | 13 |   |   |   | — |   |   |   | 1,128 |   |
| Coal contract derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | — |   |   |   | — |   |   |   | 152 |   |   |   | — |   |   |   | 152 |   |
| Commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Futures contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 2 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2 |   |
| Swap contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | — |   |   |   | 9 |   |   |   | — |   |   |   | (1 | ) |   |   | 8 |   |
| Total commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 2 |   |   |   | 9 |   |   |   | — |   |   |   | (1 | ) |   |   | 10 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $ | 234 |   |   | $ | 892 |   |   | $ | 165 |   |   | $ | (1 | ) |   | $ | 1,290 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | Quoted Prices in Active Markets for Identical Liabilities(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | Netting(1) |   |   | Total |   |
| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $ | — |   |   | $ | 81 |   |   | $ | — |   |   | $ | — |   |   | $ | 81 |   |
| Interest rate swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | — |   |   |   | 371 |   |   |   | — |   |   |   | — |   |   |   | 371 |   |
| Swaption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | — |   |   |   | — |   |   |   | 804 |   |   |   | — |   |   |   | 804 |   |
| Coal contract derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | — |   |   |   | — |   |   |   | 49 |   |   |   | — |   |   |   | 49 |   |
| Commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Futures contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 21 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 21 |   |
| Swap contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | 15 |   |   |   | 227 |   |   |   | — |   |   |   | (1 | ) |   |   | 241 |   |
| Option contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 2 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 38 |   |   |   | 227 |   |   |   | — |   |   |   | (1 | ) |   |   | 264 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $ | 38 |   |   | $ | 679 |   |   | $ | 853 |   |   | $ | (1 | ) |   | $ | 1,569 |   |
|  Notes(1) Due to the right of setoff and method of settlement, TVA elects to record commodity derivatives under the FTP based on its net commodity position with the counterparty or broker.(2) Commingled funds represent investment funds comprising multiple individual financial instruments and are classified in the table based on their existing investment portfolio. Commingled funds exclusively composed of one class of security are classified in that category (e.g., equity, debt, or foreign currency securities).  Commingled funds comprising multiple classes of securities are classified as “other commingled funds.” |   |

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| Fair Value MeasurementsAs of September 30, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | Quoted Prices in Active Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | Netting(1) |   |   | Total |   |
| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $ | 82 |   |   | $ | 1 |   |   | $ | — |   |   | $ | — |   |   | $ | 83 |   |
|  Debt securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S. government corporations and agencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 83 |   |   |   | 28 |   |   |   | — |   |   |   | — |   |   |   | 111 |   |
| Corporate debt securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | — |   |   |   | 203 |   |   |   | — |   |   |   | — |   |   |   | 203 |   |
| Residential mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | — |   |   |   | 18 |   |   |   | — |   |   |   | — |   |   |   | 18 |   |
|     Commercial mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | — |   |   |   | 2 |   |   |   | — |   |   |   | — |   |   |   | 2 |   |
| Collateralized debt obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | — |   |   |   | 6 |   |   |   | — |   |   |   | — |   |   |   | 6 |   |
| Commingled funds(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity security commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | — |   |   |   | 328 |   |   |   | — |   |   |   | — |   |   |   | 328 |   |
| Debt security commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | — |   |   |   | 185 |   |   |   | — |   |   |   | — |   |   |   | 185 |   |
| Foreign currency commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | — |   |   |   | 11 |   |   |   | — |   |   |   | — |   |   |   | 11 |   |
| Other commingled funds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | — |   |   |   | 34 |   |   |   | — |   |   |   | — |   |   |   | 34 |   |
| Total investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 165 |   |   |   | 816 |   |   |   | — |   |   |   | — |   |   |   | 981 |   |
| Currency swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | — |   |   |   | 7 |   |   |   | — |   |   |   | — |   |   |   | 7 |   |
| Coal contracts derivatives                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | — |   |   |   | — |   |   |   | 87 |   |   |   | — |   |   |   | 87 |   |
| Commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Future contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 10 |   |   |   | — |   |   |   | — |   |   |   | (7 | ) |   |   | 3 |   |
|           Swap contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | — |   |   |   | 26 |   |   |   | — |   |   |   | (14 | ) |   |   | 12 |   |
|           Option contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 1 |   |   |   | 3 |   |   |   | — |   |   |   | (2 | ) |   |   | 2 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 11 |   |   |   | 29 |   |   |   | — |   |   |   | (23 | ) |   |   | 17 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $ | 176 |   |   | $ | 852 |   |   | $ | 87 |   |   | $ | (23 | ) |   | $ | 1,092 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Quoted Prices in Active Markets for Identical Liabilities(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | Netting(1) |   |   | Total |   |
| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | — |   |   | $ | 51 |   |   | $ | — |   |   | $ | — |   |   | $ | 51 |   |
| Interest rate swaps                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | — |   |   |   | 287 |   |   |   | — |   |   |   | — |   |   |   | 287 |   |
| Swaption                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | — |   |   |   | — |   |   |   | 592 |   |   |   | — |   |   |   | 592 |   |
| Coal contracts with volume options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | — |   |   |   | — |   |   |   | 80 |   |   |   | — |   |   |   | 80 |   |
| Commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Future contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 31 |   |   |   | — |   |   |   | — |   |   |   | (7 | ) |   |   | 24 |   |
|           Swap contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | — |   |   |   | 55 |   |   |   | — |   |   |   | (14 | ) |   |   | 41 |   |
|           Option contracts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (2 | ) |   |   | (2 | ) |
| Total commodity derivatives under FTP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 31 |   |   |   | 55 |   |   |   | — |   |   |   | (23 | ) |   |   |  63 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | $ | 31 |   |   | $ | 393 |   |   | $ | 672 |   |   | $ | (23 | ) |   | $ | 1,073 |   |
|  Notes(1) Due to the right of setoff and method of settlement, TVA elects to record commodity derivatives under the FTP based on its net commodity position with the broker or other counterparty.(2) Commingled funds represent investment funds comprising multiple individual financial instruments and are classified in the table based on their existing investment portfolio. Commingled funds exclusively composed of one class of security are classified in that category (e.g., equity, debt, or foreign currency securities). Commingled funds comprising multiple classes of securities are classified as “other commingled funds.” |   |

| Fair Value Measurements Using Significant Unobservable InputsFor the Year Ended September 30, 2010  |
|----------------------------------------------------------------------------------------------------------|

|                                                                        |   | PrivatePartnerships |    |   | Coal Contracts with Volume Options |   |    | Swaption |   |
|-----------------------------------------------------------------------------|--------|---------------------|---------|--------|------------------------------------|--------|---------|----------|--------|
|                                                                        |   |                |    |   |                               |   |    |     |   |
| Balances as of October 1, 2009                                              |   | $                   | — |   |                               | $      | 7       |     |   | $ | (592 | ) |
| Purchases, issuances, and settlements                                       |   |                | 13      |   |                               |   | — |     |   |   | — |   |
| Total gains or losses (realized or unrealized):                             |   |                |    |   |                               |   |    |     |   |   |   |   |
| Net Unrealized gains (losses) deferred as regulatory assets and liabilities |   |                | — |   |                               |   | 96      |     |   |   | (212 | ) |
|  Balances at September 30, 2010                                        |   | $                   | 13      |   |                               | $      | 103     |     |   | $ | (804 | ) |

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Table of Contents

| Fair Value Measurements Using Significant Unobservable InputsFor the Year Ended September 30, 2009  |
|----------------------------------------------------------------------------------------------------------|

|                                                                                                   |   |   | Coal Contracts with Volume Options |   |   | Swaption |
|--------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------|--------|--------|----------|
|                                                                                                   |   |   |                               |   |   |     |
| Balances as of October 1, 2009                                                                         |   |   | $                                  | 813    |   |     | $ | (416 | ) |
| Total gains or losses (realized or unrealized):                                                        |   |   |                               |   |   |     |   |   |   |   |
| Net Unrealized gains (losses) deferred as regulatory assets and liabilities                       |   |   |                               | (796   | )      |     |   | (176 | ) |
| Unrealized losses related to expected net settlement fees included in fuel and purchased power expense |   |   |                               | (10    | )      |     |   | — |   |
|  Balances at September 30, 2009                                                                   |   |   | $                                  | 7      |   |     | $ | (592 | ) |

| Estimated Values of Financial InstrumentsAs of September 30  |   |
|-------------------------------------------------------------------|--------|
|                                                              |   | 2010 |   |   | 2009 |   |
|                                                              |   | CarryingAmount |   |   | FairValue |   |   | CarryingAmount |   |   | FairValue |   |
| Cash and cash equivalents                                         |   | $ | 328 |   |   | $ | 328 |   |   | $ | 201 |   |   | $ | 201 |   |
| Loans and other long-term receivables                             |   |   | 83 |   |   |   | 75 |   |   |   | 81 |   |   |   | 72 |   |
| Short-term debt, net                                              |   |   | 27 |   |   |   | 27 |   |   |   | 844 |   |   |   | 844 |   |
| Long-term debt (including current portion), net                   |   |   | 23,397 |   |   |   | 27,193 |   |   |   | 21,796 |   |   |   | 23,757 |   |

15.  Proprietary Capital

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Table of Contents

| Summary of Proprietary Capital ActivityAs of September 30  |   |
|-----------------------------------------------------------------|--------|
|                                                            |   | 2010 |   |   | 2009 |   |
| Appropriation Investment                                        |   | Power Program |   |   | Nonpower Program |   |   | Power Program |   |   | Nonpower  Program |   |
| Balance at beginning of year                                    |   | $ | 348 |   |   | $ | 4,355 |   |   | $ | 368 |   |   | $ | 4,355 |   |
| Return of appropriation investment                              |   |   | (20 | ) |   |   | (4 | )  |   |   | (20 | ) |   |   | — |   |
| Balance at end of year                                          |   |   | 328 |   |   |   | 4,351 |   |   |   | 348 |   |   |   | 4,355 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retained Earnings                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of year                                    |   | $ | 3,291 |   |   | $ | (3,701 | ) |   | $ | 2,571 |   |   | $ | (3,694 | ) |
| Net income (expense) for year                                   |   |   | 982 |   |   |   | (10 | ) |   |   | 733 |   |   |   | (7 | ) |
| Return on appropriated investment                               |   |   | (9 | ) |   |   | — |   |   |   | (13 | ) |   |   | — |   |
| Balance at end of year                                          |   |   | 4,264 |   |   |   | (3,711 | ) |   |   | 3,291 |   |   |   | (3,701 | ) |
|  Net proprietary capital at September 30, 2010             |   | $ | 4,592 |   |   | $ |  640 |   |   | $ | 3,639 |   |   | $ | 654 |   |

| Total Other Comprehensive Loss ActivityFor the years ended September 30                                           |   |
|------------------------------------------------------------------------------------------------------------------------|--------|
| Accumulated other comprehensive income, September 30, 2007                                                             |   | $ | (19 | ) |
|                                                                                                                   |   |   |   |   |
| Changes in fair value:                                                                                                 |   |   |   |   |
|     Foreign currency swaps                                                                         |   |   | (18 | ) |
| Accumulated other comprehensive loss, September 30, 2008                                                               |   |   | (37 | ) |
|                                                                                                                   |   |   |   |   |
| Changes in fair value:                                                                                                 |   |   |   |   |
|     Inflation swap                                                                                 |   |   |   |   |
|     Foreign currency swaps                                                                         |   |   | (38 | ) |
| Accumulated other comprehensive loss, September 30, 2009                                                               |   |   | (75 | ) |
|                                                                                                                   |   |   |   |   |
| Changes in fair value:                                                                                                 |   |   |   |   |
|    Foreign currency swaps                                                                               |   |   | (20 | ) |
|                                                                                                                   |   |   |   |   |
|  Accumulated other comprehensive loss, September 30, 2010                                                         |   | $ | (95 | ) |
|  NoteForeign currency swap changes are shown net of reclassifications from Othercomprehensive income to earnings. |   |

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16.  Other Income (Expense), Net

| Other Income (Expense), NetFor the years ended September 30  |   |
|-------------------------------------------------------------------|--------|
|                                                              |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                              |   |   |   |   |   |   |   |   |   |
| Interest income                                                   |   | $ | 6 |   |   | $ | 9 |   |   | $ | 13 |   |
| Gains (losses) on investments                                |   |   | 3 |   |   |   | (9 | ) |   |   | (27 | ) |
| External services                                                 |   |   | 7 |   |   |   | 14 |   |   |   | 14 |   |
| Claims settlement                                                 |   |   | — |   |   |   | 4 |   |   |   | 8 |   |
| Miscellaneous                                                     |   |   | 8 |   |   |   | 7 |   |   |   | 1 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total other income (expense), net                           |   | $ | 24 |   |   | $ | 25 |   |   | $ | 9 |   |

17.  Supplemental Cash Flow Information

18.  Benefit Plans

| •   | Original Benefit Structure.  The pension benefit for a member participating in the Original Benefit Structure is based on the member’s creditable service, the member’s average monthly salary for the highest three consecutive years of base pay, and a pension factor based on the member’s age and years of service, less a Social Security offset. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Cash Balance Benefit Structure.  The pension benefit for a member participating in the Cash Balance Benefit Structure is based on credits accumulated in the member’s account and the member’s age.  A member’s account receives credits each pay period equal to 6.00 percent of his or her straight-time earnings.  The account also receives monthly interest credits at a rate set at the beginning of each year equal to the change in the Consumer Price Index (“CPI”) for the period ending on the previous October 31 plus 3.00 percent, with the provision that the rate may not be less than 6.00 percent or more than 10.00 percent.  The actual changes in the CPI for the years ended October 31, 2009 and 2008 were negative 0.63 percent and 4.45 percent, which resulted in interest rates of 6.00 percent and 7.45 percent for CY 2010 and 2009, respectively. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Obligations and Funded StatusAs of September 30  |   |
|-------------------------------------------------------|--------|
|                                                  |   | Pension Benefits |   |   | Other Post-retirement Benefits |   |
|                                                  |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Change in benefit obligation                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Benefit obligation at beginning of year               |   | $ | 9,266 |   |   | $ | 8,080 |   |   | $ | 665 |   |   | $ | 498 |   |
| Service cost                                          |   |   | 99 |   |   |   | 84 |   |   |   | 12 |   |   |   | 7 |   |
| Interest cost                                         |   |   | 513 |   |   |   | 582 |   |   |   | 37 |   |   |   | 36 |   |
| Plan participants’ contributions                |   |   | 29 |   |   |   | 32 |   |   |   | 81 |   |   |   | 81 |   |
| Amendments                                            |   |   | 3 |   |   |   | (482 | ) |   |   | (90 | )  |   |   | 7 |   |
| Actuarial loss                                        |   |   | 1,077 |   |   |   | 1,552 |   |   |   | 69 |   |   |   | 146 |   |
| Net transfers from variable fund/401(k) plan          |   |   | 3 |   |   |   | (3 | ) |   |   | — |   |   |   | — |   |
| Expenses paid                                         |   |   | (5 | ) |   |   | (6 | ) |   |   | — |   |   |   | — |   |
| Benefits paid                                         |   |   | (591 | ) |   |   | (573 | ) |   |   | (116 | ) |   |   | (110 | ) |
| Benefit obligation at end of year                     |   |   | 10,394 |   |   |   | 9,266 |   |   |   | 658 |   |   |   | 665 |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in plan assets                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of netplan assets at beginning of year     |   |   | 6,643 |   |   |   | 6,188 |   |   |   | — |   |   |   | — |   |
| Actual return on plan assets                          |   |   | 707 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Plan participants’ contributions                |   |   | 29 |   |   |   | 32 |   |   |   | 81 |   |   |   | 81 |   |
| Net transfers from variable fund/401(k) plan          |   |   | 3 |   |   |   | (3 | ) |   |   | — |   |   |   | — |   |
| Employer contributions                                |   |   | 6 |   |   |   | 1,005 |   |   |   | 35 |   |   |   | 29 |   |
| Expenses paid                                         |   |   | (5 | ) |   |   | (6 | ) |   |   | — |   |   |   | — |   |
| Benefits paid                                         |   |   | (591 | ) |   |   | (573 | ) |   |   | (116 | ) |   |   | (110 | ) |
| Fair value of net plan assets at end of year          |   |   | 6,792 |   |   |   | 6,643 |   |   |   | — |   |   |   | — |   |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Funded status                                   |   | $ | (3,602 | ) |   | $ | (2,623 | ) |   | $ | (658 | ) |   | $ | (665 | ) |
|                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | • | For CY 2010, the COLA was zero. |
|--------|---------|---------------------------------|

|   | • | For CY 2011, the COLA will be the change in the CPI, capped at 3 percent. |
|--------|---------|---------------------------------------------------------------------------|

|   | • | For CY 2012, the COLA will be zero. |
|--------|---------|-------------------------------------|

|   | • | For CY 2013, the COLA will be the change in the CPI, capped at 2.5 percent. |
|--------|---------|-----------------------------------------------------------------------------|

|   Amounts Recognized in the Balance SheetAs of September 30  |   |
|------------------------------------------------------------------------|--------|
|                                                                   |   | Pension Benefits |   |   | Other Post-retirement Benefits |   |
|                                                                   |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Regulatory assets                                                      |   | $ | 4,456 |   |   | $ | 3,764 |   |   | $ | 255 |   |   | $ | 298 |   |
| Accrued liabilities                                                    |   |   | (4 | ) |   |   | (5 | ) |   |   | (35 | ) |   |   | (35 | ) |
| Other long-term liabilities                                            |   |   | (3,598 | ) |   |   | (2,618 | ) |   |   | (623 | ) |   |   | (630 | ) |

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| Postretirement Benefit Costs Deferred as Regulatory AssetsAs of September 30  |   |
|------------------------------------------------------------------------------------|--------|
|                                                                               |   | Pension Benefits |   |   | Other Post-retirement Benefits |   |
|                                                                               |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrecognized prior service cost (credit)                                           |   | $ | (279 | ) |   | $ | (305 | ) |   | $ | (64 | )  |   | $ | 31 |   |
| Unrecognized net loss                                                              |   |   | 4,724 |   |   |   | 3,987 |   |   |   | 319 |   |   |   | 267 |   |
| Amount deferred due to actions of regulator                                        |   |   | 11 |   |   |   | 82 |   |   |   | — |   |   |   | — |   |
|  Total regulatory assets                                                      |   | $ | 4,456 |   |   | $ | 3,764 |   |   | $ | 255 |   |   | $ | 298 |   |

| Projected Benefit Obligations in Excess of Plan AssetsAs of September 30  |   |
|--------------------------------------------------------------------------------|--------|
|                                                                           |   | 2010 |   |   | 2009 |   |
| Projected benefit obligation                                                   |   | $ | 10,394 |   |   | $ | 9,266 |   |
| Accumulated benefit obligation                                                 |   |   | 10,085 |   |   |   | 9,032 |   |
| Fair value of net plan assets                                                  |   |   | 6,792 |   |   |   | 6,643 |   |

| Components of Net Periodic Benefit CostFor the years ended September 30  |   |
|-------------------------------------------------------------------------------|--------|
|                                                                          |   | Pension Benefits |   |   | Other Post-retirement Benefits |   |
|                                                                          |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Components of net periodic benefit cost                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                                                                  |   | $ | 99 |   |   | $ | 84 |   |   | $ | 110 |   |   | $ | 12 |   |   | $ | 7 |   |   | $ | 5 |   |
| Interest cost                                                                 |   |   | 513 |   |   |   | 581 |   |   |   | 522 |   |   |   | 37 |   |   |   | 36 |   |   |   | 28 |   |
| Expected return on plan assets                                                |   |   | (548 | )  |   |   | (543 | ) |   |   | (608 | ) |   |   | — |   |   |   | — |   |   |   | — |   |
| Amortization of prior service cost                                            |   |   | (24 | )  |   |   | 37 |   |   |   | 37 |   |   |   | 6 |   |   |   | 5 |   |   |   | 5 |   |
| Recognized net actuarial loss                                                 |   |   | 181 |   |   |   | 14 |   |   |   | 41 |   |   |   | 17 |   |   |   | 7 |   |   |   | 5 |   |
| Net periodic benefit cost as actuarially determined                           |   |   | 221 |   |   |   | 173 |   |   |   | 102 |   |   |   | 72 |   |   |   | 55 |   |   |   | 43 |   |
| Amount charged (capitalized) due to actions of regulator                      |   |   | 71 |   |   |   | (82 | ) |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|  Total net periodic benefit cost recognized                              |   | $ | 292 |   |   | $ | 91 |   |   | $ | 102 |   |   | $ | 72 |   |   | $ | 55 |   |   | $ | 43 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Expected Amortization of Regulatory Assets in 2010As of September 30, 2010  |   |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   | Pension Benefits |   |   | Other Post-retirementBenefits |   |   | Total |   |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Prior service cost (credit)                                                      |   | $ | (23 | ) |   | $ | (6 | )  |   | $ | (29 | ) |
| Net actuarial loss                                                               |   |   | 282 |   |   |   | 22 |   |   |   | 304 |   |
| Deferred amounts                                                                 |   |   | 11 |   |   |   | — |   |   |   | 11 |   |

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| Actuarial AssumptionsAs of September 30                               |   |
|----------------------------------------------------------------------------|--------|
|                                                                       |   | Pension Benefits |   |   | Other Post-retirement Benefits |   |
|                                                                       |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Assumptions utilized to determine benefit obligations at September 30      |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount rate                                                              |   |   | 5.00 | % |   |   | 5.75 | % |   |   | 5.00 | % |   |   | 5.75 | % |
| Expected return on plan assets                                             |   |   | 7.50 | % |   |   | 7.75 | % |   |   | N/A |   |   |   | N/A |   |
| Rate of compensation increase                                              |   |   | 4.41 | % |   |   | 4.40 | % |   |   | N/A |   |   |   | N/A |   |
| Initial health care cost trend rate                                        |   |   | N/A |   |   |   | N/A |   |   |   | 8.00 | % |   |   | 8.00 | % |
| Ultimate health care cost trend rate                                       |   |   | N/A |   |   |   | N/A |   |   |   | 5.00 | % |   |   | 5.00 | % |
| Ultimate trend rate is reached in year beginning                           |   |   | N/A |   |   |   | N/A |   |   |   | 2016 |   |   |   | 2015 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assumptions utilized to determine expense for the years ended September 30 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount rate                                                              |   |   | 5.75 | % |   |   | 7.50 | % |   |   | 5.75 | % |   |   | 7.5 | % |
| Expected return on plan assets                                             |   |   | 7.75 | % |   |   | 8.00 | % |   |   | N/A |   |   |   | N/A |   |
| Rate of compensation increase                                              |   |   | 4.40 | % |   |   | 4.33 | % |   |   | N/A |   |   |   | N/A |   |
| Initial health care cost trend rate                                        |   |   | N/A |   |   |   | N/A |   |   |   | 8.00 | % |   |   | 8.00 | % |
| Ultimate health care cost trend rate                                       |   |   | N/A |   |   |   | N/A |   |   |   | 5.00 | % |   |   | 5.00 | % |
| Ultimate trend rate is reached in year beginning                           |   |   | N/A |   |   |   | N/A |   |   |   | 2015 |   |   |   | 2014 |   |

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|  Sensitivity to Certain Changes in Pension AssumptionsAs of September 30, 2010 |   |
|-------------------------------------------------------------------------------------|--------|
|   Actuarial Assumption                                                    |   | Change in Assumption |   |   | Impact on 2011 Pension Cost |   |   | Impact on 2010 Projected Benefit Obligation |   |
|                                                                                |   | (Increase in millions) |   |
| Discount rate                                                                       |   |   | (0.25 | %) |   | $ | 17 |   |   | $ | 296 |   |
| Rate of return on plan assets                                                       |   |   | (0.25 | %) |   |   | 16 |   |   |   | — |   |

|  Sensitivity to Changes in Assumed Health Care Cost Trend RatesAs of September 30, 2010  |   |
|----------------------------------------------------------------------------------------------------|--------|
|                                                                                               |   | 1% Increase |   |   | 1% Decrease |   |
| Effect on total of service and interest cost components                                            |   | $ | 5 |   |   | $ | (6 | ) |
| Effect on end-of-year accumulated post-retirement benefit obligation                               |   |   | 78 |   |   |   | (87 | ) |

| Asset Holdings of TVARSAs of September 30             |   |
|------------------------------------------------------------|--------|
|                                                       |   |   |   |   | Plan Assets at September 30 |   |
|  Asset Category                                       |   | Target Allocation |   |   | 2010 |   |   | 2009 |   |
|                                                       |   |   |   |   |   |   |   |   |   |
| U.S. equity securities                                     |   |   | 22.5 | % |   |   | 22 | % |   |   | 23 | % |
| Non-U.S. equity securities                                 |   |   | 22.5 | % |   |   | 23 | % |   |   | 20 | % |
| Private equity holdings or similar alternative investments |   |   | 10.0 | % |   |   | 10 | % |   |   | 6 | % |
| Private real estate holdings                               |   |   | 5.0 | % |   |   | 2 | % |   |   | 1 | % |
| Fixed income securities                                    |   |   | 31.0 | % |   |   | 33 | % |   |   | 27 | % |
| High yield securities                                      |   |   | 9.0 | % |   |   | 9 | % |   |   | 7 | % |
| Cash and equivalents                                       |   |   | 0.00 | % |   |   | 1 | % |   |   | 16 | % |
|  Total                                                |   |   | 100.0 | % |   |   | 100 | % |   |   | 100 | % |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |

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| TVA Retirement SystemAs of September 30, 2010                                                                                                                                                                                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                          |   | TOTAL (1) (2) |   |   | Quoted Prices in Active Markets forIdentical Assets(Level 1) |   |   | SignificantUnobservableInputs(Level 2) |   |   |   |   |
|                                                                                                                                                                                                                                                                                          |   | SignificantUnobservableInputs(Level 3) |   |
|                                                                                                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities                                                                                                                                                                                                                                                                             |   | $ | 706 |   |   | $ | 706 |   |   | $ | — |   |   | $ | — |   |
|  Debt securities                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate debt securities                                                                                                                                                                                                                                                                     |   |   | 1,180 |   |   |   | — |   |   |   | 1,180 |   |   |   | — |   |
| Residential mortgage-backed securities                                                                                                                                                                                                                                                        |   |   | 430 |   |   |   | — |   |   |   | 430 |   |   |   | — |   |
| Debt securities issued by U.S. Treasury and other U.S. government agencies                                                                                                                                                                                                                    |   |   | 430 |   |   |   | 426 |   |   |   | 4 |   |   |   | — |   |
| Debt securities issued by foreign governments                                                                                                                                                                                                                                                 |   |   | 177 |   |   |   | — |   |   |   | 177 |   |   |   | — |   |
| Asset-backed securities                                                                                                                                                                                                                                                                       |   |   | 100 |   |   |   | — |   |   |   | 100 |   |   |   | — |   |
| Debt securities issued by state/local Governments                                                                                                                                                                                                                                        |   |   | 20 |   |   |   | — |   |   |   | 20 |   |   |   | — |   |
| Commercial mortgage-backed securities                                                                                                                                                                                                                                                         |   |   | 4 |   |   |   | — |   |   |   | 4 |   |   |   | — |   |
| Commingled Funds                                                                                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                                                                                                                                                                                                                                                                                        |   |   | 1,733 |   |   |   | — |   |   |   | 1,733 |   |   |   | — |   |
| Debt                                                                                                                                                                                                                                                                                          |   |   | 766 |   |   |   | — |   |   |   | 766 |   |   |   | — |   |
| Blended                                                                                                                                                                                                                                                                                       |   |   | 318 |   |   |   | — |   |   |   | 318 |   |   |   | — |   |
|  Cash equivalents                                                                                                                                                                                                                                                                        |   |   | 410 |   |   |   | 3 |   |   |   | 407 |   |   |   | — |   |
|  Private equity funds                                                                                                                                                                                                                                                                    |   |   | 492 |   |   |   | — |   |   |   | — |   |   |   | 492 |   |
|  Private real estate funds                                                                                                                                                                                                                                                               |   |   | 180 |   |   |   | — |   |   |   | 22 |   |   |   | 158 |   |
|  Treasury bills, U.S. Government notes and securities held as futures and other derivative collateral                                                                                                                                                                               |   |   | 46 |   |   |   | 29 |   |   |   | 17 |   |   |   | — |   |
|  Securities lending commingled funds                                                                                                                                                                                                                                                     |   |   | 7 |   |   |   | — |   |   |   | 7 |   |   |   | — |   |
| Derivatives                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency forward receivable                                                                                                                                                                                                                                                           |   |   | 737 |   |   |   | — |   |   |   | 737 |   |   |   | — |   |
| Futures                                                                                                                                                                                                                                                                                       |   |   | 19 |   |   |   | 19 |   |   |   | — |   |   |   | — |   |
| Purchased options                                                                                                                                                                                                                                                                             |   |   | 1 |   |   |   | — |   |   |   | 1 |   |   |   | — |   |
|  Total Assets                                                                                                                                                                                                                                                                            |   | $ | 7,756 |   |   | $ | 1,183 |   |   | $ | 5,923 |   |   | $ | 650 |   |
| Liabilities                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives                                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency forward payable                                                                                                                                                                                                                                                              |   | $ | 742 |   |   | $ | — |   |   | $ | 742 |   |   | $ | — |   |
| Interest rate swaps                                                                                                                                                                                                                                                                           |   |   | 2 |   |   |   | — |   |   |   | 2 |   |   |   | — |   |
| Credit default swaps                                                                                                                                                                                                                                                                          |   |   | 1 |   |   |   | — |   |   |   | 1 |   |   |   | — |   |
| Written option obligations                                                                                                                                                                                                                                                                    |   |   | 3 |   |   |   |  1 |   |   |   |  2 |   |   |   | — |   |
|  Total Liabilities                                                                                                                                                                                                                                                                       |   | $ | 748 |   |   | $ | 1 |   |   | $ | 747 |   |   | $ | — |   |
|  Note(1) Excludes approximately $208 million in net payables and receivables associated with security purchases and sales.(2) Excludes a $7 million payable for collateral on loaned securities in connection with TVARS’s participation in securities lending programs. |   |

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|  Fair Value Measurements Using Significant Unobservable InputsAs of September 30, 2010  |   |
|---------------------------------------------------------------------------------------------------|--------|
|                                                                                              |   |   |   |
|                                                                                              |   | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |   |
|                                                                                              |   |   |   |
| Beginning balance, October 1, 2009                                                                |   | $ | 458 |   |
| Net realized/unrealized depreciation                                                              |   |   | 75 |   |
| Purchases, sales, issuances, and settlements (net)                                                |   |   | 117 |   |
|  Ending balance,  September 30, 2010                                               |   | $ | 650 |   |

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| Estimated Future Benefits PaymentsAs of September 30, 2010  |   |
|------------------------------------------------------------------|--------|
|                                                             |   | PensionBenefits |   |   | Other Post-Retirement Benefits |   |
| 2011                                                             |   | $ | 699 |   |   | $ | 36 |   |
| 2012                                                             |   |   | 686 |   |   |   | 38 |   |
| 2013                                                             |   |   | 688 |   |   |   | 39 |   |
| 2014                                                             |   |   | 688 |   |   |   | 40 |   |
| 2015                                                             |   |   |  691 |   |   |   |  41 |   |
| 2016 - 2020                                                      |   |   | 3,474 |   |   |   | 210 |   |

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19.  Asset Acquisitions and Dispositions

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20.  Commitments and Contingencies

| Commitments and ContingenciesPayments due in the year ending September 30                                                                         |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |   | Thereafter |   |   | Total |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt                                                                                                                                                   |   | $ | 1,035 |   |   | $ | 1,523 |   |   | $ | 2,308 |   |   | $ | 32 |   |   | $ | 1,032 |   |   | $ | 17,696 |   |   | $ | 23,626 | (1) |
| Lease obligations                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Capital                                                                                                                              |   |   | 53 |   |   |   | 5 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2 |   |   |   | 60 |   |
|    Non-cancelable operating                                                                                                             |   |   | 49 |   |   |   | 41 |   |   |   | 39 |   |   |   | 28 |   |   |   | 25 |   |   |   | 171 |   |   |   | 353 |   |
| Purchase obligations                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Power                                                                                                                                |   |   | 275 |   |   |   | 256 |   |   |   | 197 |   |   |   | 189 |   |   |   | 238 |   |   |   | 4,304 |   |   |   | 5,459 |   |
|    Fuel                                                                                                                                 |   |   | 1,956 |   |   |   | 1,360 |   |   |   | 1,174 |   |   |   | 865 |   |   |   | 825 |   |   |   | 1,712 |   |   |   | 7,892 |   |
|    Other                                                                                                                                |   |   | 85 |   |   |   | 118 |   |   |   | 113 |   |   |   | 122 |   |   |   | 55 |   |   |   | 313 |   |   |   | 806 |   |
| Payments on other financings                                                                                                                           |   |   | 135 |   |   |   | 136 |   |   |   | 488 |   |   |   | 100 |   |   |   | 104 |   |   |   | 713 |   |   |   | 1,676 |   |
|  Total                                                                                                                                            |   | $ | 3,588 |   |   | $ | 3,439 |   |   | $ | 4,319 |   |   | $ | 1,336 |   |   | $ | 2,279 |   |   | $ | 24,911 |   |   | $ | 39,872 |   |
|  Note(1) Does not include noncash items of foreign currency valuation loss of $14 million and net discount on sale of Bonds of $216 million. |   |

| Energy Prepayment ObligationsPayments Due in the Year Ending September 30  |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   | 2015 |   |   | Thereafter |   |   | Total |   |
| Energy prepayment obligations                                                   |   | $ | 105 |   |   | $ | 105 |   |   | $ | 102 |   |   | $ | 100 |   |   | $ | 100 |   |   | $ | 310 |   |   | $ | 822 |   |

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21.  Related Parties

| Related Party TransactionsFor the years ended, or as of, September 30  |
|-----------------------------------------------------------------------------|
|                                                                        |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Sales of electricity services                                               |   | $ | 215 |   |   | $ | 260 |   |   | $ | 229 |   |
| Other revenues                                                              |   |   | — |   |   |   | 1 |   |   |   | — |   |
| Other expenses                                                              |   |   | 263 |   |   |   | 250 |   |   |   | 231 |   |
| Receivables                                                                 |   |   | 26 |   |   |   | 19 |   |   |   | 19 |   |
| Investments                                                                 |   |   | 225 |   |   |   | 25 |   |   |   | — |   |
| Payables                                                                    |   |   | 129 |   |   |   | 133 |   |   |   | 60 |   |
| Return on Power Program Appropriation Investment                            |   |   | 9 |   |   |   | 13 |   |   |   | 20 |   |
| Repayment of Power Program Appropriation Investment                         |   |   | 24 |   |   |   | 20 |   |   |   | 20 |   |

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22.  Unaudited Quarterly Financial Information

|               |   | Unaudited Quarterly Financial Information |   |
|--------------------|--------|-------------------------------------------|--------|
|               |   | 2010                                      |   |
|               |   | First                                     |   |   | Second |   |   | Third |   |   | Fourth |   |   | Total |   |
| Operating revenues |   | $                                         | 2,349  |   |   | $ | 2,622 |   |   | $ | 2,587 |   |   | $ | 3,316 |   |   | $ | 10,874 |   |
| Operating expenses |   |                                      | 1,878  |   |   |   | 1,875 |   |   |   | 2,073 |   |   |   | 2,806 |   |   |   | 8,632 |   |
| Operating income   |   |                                      | 471    |   |   |   | 747 |   |   |   | 514 |   |   |   | 510 |   |   |   | 2,242 |   |
| Net income (loss)  |   |                                      | 150    |   |   |   | 430 |   |   |   | 199 |   |   |   | 193 |   |   |   | 972 |   |

|               |   | 2009   |   |
|--------------------|--------|--------|--------|
|               |   | First  |   |   | Second |   |   | Third |   |   | Fourth |   |   | Total |   |
| Operating revenues |   | $      | 3,077  |   |   | $ | 2,933 |   |   | $ | 2,566 |   |   | $ | 2,679 |   |   | $ | 11,255 |   |
| Operating expenses |   |   | 3,042  |   |   |   | 2,503 |   |   |   | 2,425 |   |   |   | 1,312 |   |   |   | 9,282 |   |
| Operating income   |   |   | 35     |   |   |   | 430 |   |   |   | 141 |   |   |   | 1,367 |   |   |   | 1,973 |   |
| Net income (loss)  |   |   | (305   | ) |   |   | 133 |   |   |   | (167 | ) |   |   | 1,065 |   |   |   | 726 |   |

23.  Subsequent Event

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Report of Independent Registered Public Accounting Firm

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Internal Control over Financial Reporting

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Report of Independent Registered Public Accounting Firm

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ITEM 9B.  OTHER INFORMATION

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PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors

| Directors                    | Age | Year Current Term Began | Year Term Expires |
|------------------------------|-----|-------------------------|-------------------|
| Dennis C. Bottorff, Chairman | 66  | 2006                    | 2011              |
| Robert M. Duncan             | 59  | 2006                    | 2011              |
| Howard A. Thrailkill         | 71  | 2006                    | 2010              |
| Thomas C. Gilliland          | 62  | 2008                    | 2011              |
| Bishop William Graves        | 74  | 2008                    | 2012              |
| Marilyn Brown                | 61  | 2010                    | 2012              |
| Barbara Haskew               | 70  | 2010                    | 2014              |
| Neil McBride                 | 64  | 2010                    | 2013              |
| William B. Sansom            | 69  | 2010                    | 2014              |

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Executive Officers

| Executive Officers                                     | Title                                                                       | Age | Employment Commenced                      |
|--------------------------------------------------------|-----------------------------------------------------------------------------|-----|-------------------------------------------|
| Tom Kilgore                                            | President and Chief Executive Officer                                       | 62  | 2005                                      |
| John M. Thomas, III                                    | Chief Financial Officer                                                     | 47  | 2005                                      |
| Kimberly S. Greene       | Group President, Strategy and External Relations             | 44  | 2007                                      |
| Janet C. Herrin                                        | Executive Vice President, People and Performance                            | 56  | 1978                                      |
| William R. McCollum, Jr.                               | Chief Operating Officer                                                     | 59  |        2007 |
| Ralph E. Rodgers                                       | Acting General Counsel                                                      | 56  | 1979                                      |
| Daniel A. Traynor                                 | Vice President and Chief Information Officer                                | 54  |  2010                           |
| Preston D. Swafford                                    | Executive Vice President and Chief Nuclear Officer, Nuclear Generation | 50  | 2006                                      |
| Robin E. Manning                                       | Executive Vice President, Power System Operations                           | 54  | 2008                                      |
| Kenneth R. Breeden                                     | Executive Vice President, Customer Relations                                | 62  | 2004                                      |
| Van M. Wardlaw                                         | Executive Vice President, Enterprise Relations                              | 50  | 1982                                      |
| Ashok S. Bhatnager                                     | Senior Vice President, Nuclear Generation, Development and Construction     | 54  | 1999                                      |
| Steve Byone                                            | Vice President, Controller and Chief Risk Officer                           | 51  | 2009                                      |

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Disclosure and Financial Code of Ethics

Committees of the TVA Board

|   | • | Finance, Rates, and Portfolio Committee |
|--------|---------|-----------------------------------------|

|   | • | Customer and External Relations Committee |
|--------|---------|-------------------------------------------|

|   | • | People and Performance Committee |
|--------|---------|----------------------------------|

|   | • | Nuclear Committee |
|--------|---------|-------------------|

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ITEM 11.  EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

|   | • | Provide a competitive level of compensation that enables TVA to attract, retain, and motivate highly competent employees.  Total target compensation for each position in TVA is determined by market pricing based on a level needed to attract, retain, and motivate employees critical to TVA’s success in achieving its mission.  Accordingly, total compensation levels typically are targeted at the median (50th percentile) of the relevant labor market for most positions.  However, total compensation levels for some positions are targeted at a higher level (typically between the 50th and 75th percentile).  These positions have higher targeted total compensation levels because of market scarcity, recruitment and retention issues, and other business reasons. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Encourage and reward executives for their performance and contributions to the successful achievement of financial and operational goals.  A key tenet of the Compensation Plan is to pay for performance by rewarding all employees, but the executives at a greater level, for improvement in TVA’s overall performance, as well as that of individual business units.  The TVA Board believes that the portion of total direct compensation delivered through structured incentive compensation should increase as an employee’s position and level of responsibility within TVA increases.  Accordingly, a significant percentage of total target direct compensation opportunity for the Named Executive Officers (40 percent to 65 percent) is performance-based incentive compensation. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Provide executives with the focus to achieve short-term and long-term business goals that are important to TVA, TVA’s customers, and the people TVA serves.  TVA seeks to hire and retain executives who are focused on both TVA’s short-term and long-term success.  The Compensation Plan is designed to achieve this goal by providing a mix of salary and performance-based annual and long-term incentive compensation. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Improve overall company performance through productivity enhancement.  An executive cannot help meet TVA’s goals and improve performance without the work of others.  For this reason, the performance goals set at the corporate level are the same for both executives and all non-executive employees.  This generally translates into all TVA employees receiving compensation in a manner that aligns their work with the same goals and encourages and rewards them for the successful achievement of TVA’s goals. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Compensation Program Components for Named Executive Officers |
|--------------------------------------------------------------|
| Compensation Component                                       |   | Objective |   | Key Features |
| Annual Salary                                                |   | Fixed and paid biweekly to executives |   | Total direct compensation (salary plus annual and long-term incentive compensation plus long-term deferred compensation) is targeted at the median (50th percentile) for similar positions at other companies in TVA’s peer group, or above the median (50th to 75th percentile) for positions affected by market scarcity, recruitment and retention issues, and other business reasons with annual salary targeted to the same ranges Reviewed annually to consider changes in peer group benchmark salaries and/or exceptional individual merit performances in past years |
|                                                         |   |   |   |   |
| Annual Incentive Compensation                                |   | Not-guaranteed, variable, performance-based, and based on the attainment of pre-established performance goals for the fiscal year |   | Target annual incentive opportunities increase with position and responsibility and are based on the opportunities other companies in TVA’s peer group provided to those in similar positions Annual incentive payouts are based on the results of performance goals at the TVA level and may be adjusted based on the evaluation of performance during the year Annual incentive opportunities are reviewed annually to consider changes in peer group benchmark short-term incentives |
|                                                         |   |   |   |   |
| Long-Term Incentive Compensation                             |   | Not-guaranteed, variable, and based on the attainment of pre-established performance goals for a performance cycle, typically three fiscal years |   | Target long-term incentive opportunities are limited to executives in critical positions who make decisions that significantly influence developing and attaining TVA’s long-term strategic objectives Target long-term incentive payouts, which may be adjusted, are based on achieving performance goals established for a specific performance cycle Long-term incentive opportunities are reviewed annually to consider changes made in the long-term incentives by companies in TVA’s peer group |
|                                                         |   |   |   |   |
| Long-Term Deferred Compensation                              |   | Awarded in the form of annual credits that vest after a specified period of time, typically three to five years |   | Awarded to provide retention incentives to executives similar to the retention incentive provided by restricted stock or restricted stock units Executives generally must remain at TVA for the entire length of the agreement in order to receive compensation credits The amount of the annual long-term deferred compensation credit is targeted to be about 20 percent of total long-term compensation (including the long-term incentive compensation described above) |
|                                                         |   |   |   |   |
| Pension Plans                                                |   | Both qualified and supplemental, which provide compensation beginning with retirement or termination of employment |   | Broad-based plans available to full-time employees of TVA that are qualified under IRS rules and that are similar to the qualified plans provided by other companies in TVA’s peer group Certain executives in critical positions also participate in a non-qualified pension plan that provides supplemental pension benefits at compensation levels that exceed the limits permitted by the IRS regulations applicable to qualified plans; these supplemental benefits are comparable to those provided by other companies in TVA’s peer group |

|   | • | Specifies all compensation (including salary or any other pay, bonuses, benefits, incentives, and any other form of remuneration) for the CEO and TVA employees; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | Is based on an annual survey of the prevailing compensation for similar positions in private industry, including engineering and electric utility companies, publicly owned electric utilities, and federal, state, and local governments; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Provides that education, experience, level of responsibility, geographic differences, and retention and recruitment needs will be taken into account in determining compensation of employees. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The TVA Board will annually approve all compensation (including salary or any other pay, bonuses, benefits, incentives, and other form of remuneration) of all managers and technical personnel who report directly to the CEO (including any adjustment to compensation); |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | On the recommendation of the CEO, the TVA Board will approve the salaries of employees whose salaries would be in excess of Level IV of the Executive Schedule ($155,500 in 2010); and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The CEO will determine the salary and benefits of employees whose annual salary is not greater than Level IV of the Executive Schedule ($155,500 in 2010). |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | Published and customized compensation surveys reflecting the relevant labor markets identified for designated positions; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------|

|   | • | Publicly disclosed information from the proxy statements and annual reports on Form 10-K of energy services companies with revenues of $3.0 billion and greater. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Test target compensation level and incentive opportunity competitiveness; |
|--------|---------|---------------------------------------------------------------------------|

|   | • | Serve as a point of reference for establishing pay packages for recruiting executives; and |
|--------|---------|--------------------------------------------------------------------------------------------|

|   | • | Determine appropriate target compensation levels and incentive opportunities to maintain the desired degree of market competitiveness. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------|

| Allegheny Energy, Inc.             | Energy Future Holdings Corp.  | Pacific Gas and Electric Co.*          |
|------------------------------------|-------------------------------|----------------------------------------|
| Alliant Energy Corp.               | Entergy Corp.*                | Pepco Holdings, Inc.*                  |
| Ameren Corp.*                      | Exelon Corp.*                 | Pinnacle West Capital Corp.            |
| American Electric Power Co., Inc.* | FirstEnergy Corp.*            | PPL Corp.*                             |
| Calpine Corp.                      | FPL Group, Inc.*              | Progress Energy, Inc.*                 |
| CenterPoint Energy, Inc.           | GDF SUEZ Energy North America | Public Service Enterprise Group, Inc.* |
| CMS Energy Corp.*                  | Integrys Energy Group, Inc.*  | Puget Energy, Inc.                     |
| Consolidated Edison, Inc.*         | Mirant Corporation            | Reliant Energy, Inc.*                  |
| Constellation Energy Group, Inc.*  | Northeast Utilities System*   | SCANA Corp.                            |
| Dominion Resources, Inc.*          | NRG Energy, Inc.              | Sempra Energy*                         |
| Duke Energy Corp.*                 | NSTAR Electric Co.            | The Southern Company*                  |
| Dynegy, Inc.                       | NV Energy                     | Wisconsin Energy Corp.                 |
| Edison International*              | OGE Energy Corp.              | Xcel Energy, Inc.*                     |
| El Paso Corp.                      |                          |                                   |
|                               |                          |                                   |

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|   NEO                                    |  Annual Target Incentive Opportunity* |
|----------------------------------------------------|--------------------------------------------|
|                                               |                                       |
| Mr. Kilgore                                        | 100 %                                      |
| Mr. Thomas                                         |   65 %                           |
| Mr. Hoskins                                        |   40 %                           |
| Ms. Greene                                         |   60 %                           |
| Mr. McCollum                                       |   70 %                           |
| Mr. Swafford                                       |   80 %                           |
| Mr. Bhatnagar                                      |   60 %                           |
|                                               |
| * Represents a percent of each NEO’s salary. |

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| 2010 TVA Corporate Scorecard                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   | Goals |
| Performance Measure                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Weight |   | ResultsAchieved |   | Threshold(50%) |   | Target(100%) |   | Maximum(150%) |
| Rates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |
| Net Cash Flow ($ Millions)(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 50% |   | $689 More Than Budget |   | $150 Less Than Budget |   | Budget |   | $150 More Than Budget |
| Reliability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |
| Equivalent  Availability Factor (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 50% |   | 85.8 |   | 84.7 |   | 86.5 |   | 88.5 |
|  Notes(1) Net Cash Flow is a non-GAAP measure that is derived from the Statement of Cash Flow.  Net Cash Flow is derived from Net Cash Provided by OperatingActivities + Net Cash Used in Investing Activities - Net Cash Flow from Change in Fuel Cost Adjustment Deferral Account +/- Winning Performance FiscalYear 2010 Budget Variance. (2) Equivalent Availability Factor is a ratio of actual available generation from all TVA coal, combined cycle, and nuclear generating assets in a given period compared to maximum availability. |

| EAIPAmount | = | AnnualSalary | X | Annual TargetIncentiveOpportunity | X | Percent of CorporateGoal Achievement(0% to 150%) | X | CorporateModifier(-20% to +10%) |
|------------|---|--------------|---|-----------------------------------|---|--------------------------------------------------|---|---------------------------------|

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| 2010 EAIP Payouts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| NEO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Salary | EAIP Incentive Opportunity | Target EAIP Payout | % Corporate Goal Achievement (with Corporate Modifier) |   Individual Performance Adjustment | FinalEAIP Payout |
|  Tom Kilgore                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  $850,000 |  100% |  $850,000 |  115.28%(1) |  (10.0%) |  $881,892 |
|  John M. Thomas, III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  $520,000 |  65% |  $338,000 |  105.00%(2) |  5.0% |  $371,876(3) |
|  John M. Hoskins                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  $272,000 |  40% |  $108,800 |  105.00%(2) |  0.0% |  $114,004(3) |
|  Kimberly S. Greene                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  $650,000 |  60% |  $390,000 |  105.00%(2) |  5.0% |  $429,088(3) |
|  William R. McCollum, Jr.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  $745,514 |  70% |  $521,860 |  105.00%(2) |  (5.0%) |  $519,481(3) |
|  Preston D. Swafford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  $525,000 |  80% |  $420,000 |  105.00%(2) |  0.0% |  $440,090(3) |
|  Ashok S. Bhatnagar                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  $456,246 |  60% |  $273,748 |  105.00%(2) |  0.0% |  $286,842(3) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| Notes(1) A corporate modifier was not included in the award calculation for Mr. Kilgore.  Mr. Kilgore was not included in the EAIP award pool in FY 2010.(2) For FY 2010, the CEO approved a corporate modifier for all other EAIP participants that reduced the percent of corporate goal achievement by 10.28 percentage points basedon an assessment of TVA’s health and overall performance during 2010.(3) Calibrated along with payouts to all other EAIP participants to ensure that the total of all awards did not exceed the EAIP award pool. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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|   | • | Using corporate-level performance criteria that are directly aligned with TVA’s mission; |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | • | Using a “cumulative” performance approach to measure performance achieved for three-year performance cycles; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------|

|   | • | Targeting award opportunities in the final year of each performance cycle at levels that approximate median levels of competitiveness with TVA’s peer group and incorporating the Committee’s policy of targeting that (i) approximately 80 percent of each executive’s total long-term incentive opportunity be performance based (under the ELTIP) and (ii) approximately 20 percent of each executive’s total long-term incentive opportunity be retention and security-oriented (under the Long-Term Deferred Compensation Plan (“LTDCP”) as described below under the heading “Long-Term Deferred Compensation”); and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Utilizing an award opportunity range of 50 percent to 150 percent of salary to enable payment of awards that are commensurate with performance achievements. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ELTIPPayout | = | Salary | X | ELTIP IncentiveOpportunity | X | Percent of OpportunityAchieved |
|-------------|---|--------|---|----------------------------|---|--------------------------------|

|   | • | The target goal (which will also serve as the threshold goal that must be met before there is any incentive payment under this measure) is established based on the 75th percentile of the performance of the surveyed transmission providers (the “ELTIP CPI Comparison Group”);and |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The maximum goal is established at the 90th percentile of the ELTIP CPI Comparison Group’s performance. |
|--------|---------|---------------------------------------------------------------------------------------------------------------|

|   | • | The threshold goal is based on improvement over the last performance cycle; |
|--------|---------|-----------------------------------------------------------------------------|

|   | • | The target goal is TVA ranking at or above the 75th percentile of the performance of a comparison group of regional utilities composed of 22 utilities, which are subsidiaries of holding companies with annual revenues greater than $3.0 billion, in the regional proximity of the TVA service territory (the “ELTIP Retail Rates Comparison Group”); and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | The maximum goal is TVA ranking at or above the 90th percentile of the ELTIP Retail Rates Comparison Group’s performance. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

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| ELTIP Performance Goals, Weighting, and Percent of Opportunity  |
|---------------------------------------------------------------------------|
|                                                                      | Goals |   | Performance Achievement |
| Performance Measure                                                       | Threshold(50%) | Target(100%) | Maximum(150%) | Performance Results | Actual(%) | X | Weight(%) | = | Result(%) |
| Retail Rate                                                               | Improvement Over Last Performance Cycle | Top 25% of ComparisonCompanies | Top 10% of Comparison Companies | Below Threshold | 0.0% |   | 50% |   | 0.0% |
| Connection Point Interrruption                                            |   N/A | Top 25% of Comparison Companies | Top 10% of Comparison Companies | Maximum | 150% |   | 50% |   | 75% |
|                                                                      |   |   |   | Overall Percent of Opportunity Achieved | 75% |

| 2010 ELTIP Payouts        |
|--------------------------------|
| NEO                            | Salary | ELTIP Incentive Opportunity | Target ELTIP Payout | Percent of Opportunity Achieved | ELTIP Payout |
|  Tom Kilgore              |  $850,000 |  150% |  $1,275,000 |  75% |  $956,250 |
|  John M. Thomas, III      |  $520,000 |  125% |  $650,000 |  75% |  $487,500 |
|  John M. Hoskins          |  $272,000 |  25% |  $68,000 |  75% |  $51,000 |
|  Kimberly S. Greene       |  $650,000 |  120% |  $780,000 |  75% |  $585,000 |
|  William R. McCollum, Jr. |  $745,514 |  100% |  $745,514 |  75% |  $559,136 |
|  Preston D. Swafford      |  $525,000 |  100% |  $525,000 |  75% |  $393,750 |
|  Ashok S. Bhatnagar       |  $456,246 |  50% |  $228,123 |  75% |  $171,092 |

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|  Performance Measure                    |  Weight        | Threshold(50%)                                | Target(100%)                          | Maximum(150%)                         |
|----------------------------------------------|---------------------|-----------------------------------------------|---------------------------------------|---------------------------------------|
|  Retail RatesRelative Position(1)       |   33 1/3% |  Improvement Over Last Performance Cycle |  Top 25% of Comparison Companies |  Top 10% of Comparison Companies |
|  Connection PointInterruptions(2)  |   33 1/3% |   N/A                               |   1.12                      |   0.78                      |
|  Non-Fuel Operationsand Maintenance(3)  |   33 1/3% |  Improvement Over Last Performance Cycle |  Top 50% of Comparison Companies |  Top 25% of Comparison Companies |

|  Performance Measure                                     |  Weight    | Threshold(50%)   | Target(100%)     | Maximum(150%)    |
|---------------------------------------------------------------|-----------------|------------------|------------------|------------------|
|  Retail RatesRelative Position(1)                        |   50% |   12th |   8th  |   6th  |
|  System ReliabilityLoad Not Served(2)               |   30% |   7.8  |   5.9  |   3.8  |
|  ResponsibilityOrganizational Health Index(3)  |   10% |   55.0 |   58.0 |   61.0 |
|  Stakeholder Survey(4)                              | 10%             | 78.0             | 80.0             | 82.0             |

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|   | – | Original Benefit Structure (“OBS”) for employees covered under the plan prior to January 1, 1996, with a pension based on a final average pay formula. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | – | Cash Balance Benefit Structure (“CBBS”) for employees first hired on or after January 1, 1996, with a pension based on an account that receives pay credits equal to six percent of compensation plus interest. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | – | For OBS members, TVA provides matching contributions of 25 cents on every dollar up to 1.5 percent of annual salary. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | – | For CBBS members, TVA provides matching contributions of 75 cents on every dollar up to 4.5 percent of annual salary. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

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Executive Compensation Tables and Narrative Disclosures

| Summary Compensation Table                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Name and Principal Position(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Year(b) | Salary($)(c) | Bonus($)(d) | StockAwards($)(e) | OptionAwards($)(f) | Non-Equity Incentive Plan Compensation($)(g) | Change in Pension Value andNonqualified Deferred Compensation Earnings($)(h) | All Other Compensation($)(i) | Total($)(j) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| Tom KilgorePresident and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 201020092008 | $853,269$853,270$655,000 | ——— | ——— | ——— | $1,838,142(1)$0$1,099,426(5) | $595,643(2)$$0(4)$406,152(6) | $311,025(3)$310,350$310,125 | $3,598,079$1,163,620$2,470,703 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| John M. Thomas, IIIChief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 201020092008 | $410,000—— | ——— | ——— | ——— | 859,376(7)—— | $177,260(8)—— | $91,381(9)—— | $1,538,017—— |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| John M. HoskinsSenior Vice President, Treasury                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 201020092008 | $273,045—— | $ 40,000(10)—— | ——— | ——— | $165,004 (11)—— | $347,151(12)—— | $63,675(13)—— | $888,875—— |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| Kimberly S. GreeneGroup President,Strategy and External Relations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 201020092008 | $603,942$527,020$503,847 | ——— | ——— | ——— | $1,014,088(14)$393,750(17)$493,838(19) | $536,376(15)$135,091(18)$223,707(20) | $172,770(16)$172,082$78,797 | $2,327,176$1,227,943$1,300,189 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| William R. McCollum, Jr.Chief Operating Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 201020092008 | $748,381$748,381$726,547 | ——— | ——— | ——— | $1,078,617(21)$559,136(24)$751,751(26) | $335,712(22)$265,870(25)$126,440(27) | $222,770(23)$222,082$223,237 | $2,385,480$1,795,469$1,827,975 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| Preston D. SwaffordExecutive Vice President and Chief Nuclear Officer, Nuclear Generation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 201020092008 | $527,019$499,877— | —$100,000(31)— | ——— | ——— | $833,840(28)$558,390(32)—  | $325,208(29)$201,516(33)—  | $167,711(30)$147,082—  | $1,853,778$1,506,865  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| Ashok S. BhatnagarSenior Vice President,Nuclear GenerationDevelopment and Construction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 201020092008 | $458,000$458,001$437,863 | ——— | ——— | ——— | $457,933(34)$375,609(37)$403,661(39) | $311,861(35)$245,892(38)$29,226(40) | $190,450(36)$165,437$165,612 | $1,418,244$1,244,939$1,036,362 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |
|  Notes                                                                           (1)  Represents $881,892 awarded under the EAIP and $956,250 awarded under the ELTIP. (2)  Reflects increases of $18,637 under the CBBS and $577,006 under the SERP. (3)  Represents a credit in the amount of $300,000 that vests on November 30, 2010, which was provided under a LTDCP agreement with Mr. Kilgore, and $11,025 in 401(k) employer matching contributions.  See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (4)  Reflects an increase of $16,929 under the CBBS and a decrease of $133,752 under the SERP. (5)  Represents $374,806 awarded under the EAIP and $724,620 awarded under the ELTIP. (6)  Represents increases of $12,232 under the CBBS and $393,920 under the SERP. (7)  Represents $371,876 awarded under the EAIP and $487,500 awarded under the ELTIP. (8)  Reflects increases of $30,848 under the CBBS and $146,412 under the SERP.  |

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|  (9)   Represents a credit in the amount of $50,000 that vests on September 30, 2011, which was provided under a LTDCP agreement with Mr. Thomas, $10,075 in vehicle allowance payments, and $11,025 in 401(k) employer matching contributions, $14,917 in estimated costs incurred by TVA under the Financial Counseling Services Program, and $5,364 in estimated gross-up amounts that reasonably approximate additional income and employment taxes payable as a result of TVA’s payments under to the Financial Counseling Services Program.  See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (10)  Represents a lump sum payment awarded to Mr. Hoskins for assuming additional duties and responsibilities while serving as Interim Chief Financial Officer. (11)  Represents $114,004 awarded under the EAIP and $51,000 awarded under the ELTIP. (12)  Reflects increases of $283,265 under the OBS and $63,886 under the SERP. (13)  Represents a credit in the amount of $60,000 that vests on October 1, 2011, which was provided under a LTDCP agreement with Mr. Hoskins, and $3,675 in 401(k) employer matching contributions.  See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (14)  Represents $429,088 awarded under the EAIP and $585,000 awarded under the ELTIP. (15)  Represents increases of $27,331 under the CBBS and $509,045 under the SERP. (16)  Represents credits totaling $150,000, $100,000 of which vests on September 30, 2011, and $50,000 of which vest on September 30, 2012, provided under two separate LTDCP agreements with Ms. Greene, $11,745 in vehicle allowance payments, and $11,025 in 401(k) employer matching contributions.  See information regarding the details of the LTDCP agreements under “Long-Term Deferred Compensation Plan.” (17)  Represents $393,750 awarded under the ELTIP. (18)  Represents increases of $20,754 under the CBBS and $114,337 under the SERP. (19)  Represents $252,298 awarded under the EAIP and $241,540 awarded under the ELTIP. (20)  Represents increases of $9,529 under the CBBS and $214,178 under the SERP. (21)  Represents $519,481 awarded under the EAIP and $559,136 awarded under the ELTIP. (22)  Represents increases of $18,404 under the CBBS and $317,308 under the SERP. (23)  Represents a credit in the amount of $200,000 that vests on September 30, 2011, which was provided under a LTDCP agreement with Mr. McCollum, $11,745 in vehicle allowance payments, and $11,025 in 401(k) employer matching contributions.  See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (24)  Represents $559,136 awarded under the ELTIP. (25)  Represents increases of $15,789 under the CBBS and $250,081 under the SERP. (26)  Represents $376,658 awarded under the EAIP and $375,093 awarded under the ELTIP. (27)  Represents increases of $10,821 under the CBBS and $115,619 under the SERP. (28)  Represents $440,090 awarded under the EAIP and $393,750 awarded under the ELTIP. (29)  Represents increases of $28,526 under the CBBS and $296,682 under the SERP. (30)  Represents a credit in the amount of $125,000 that vested on September 30, 2010 which was provided under a LTDCP agreement with Mr. Swafford, $11,745 in vehicle allowance payments, $11,025 in 401(k) employer matching contributions, $14,667 in estimated costs incurred by TVA under the Financial Counseling Services Program, and $5,274 in estimated gross-up amounts that reasonably approximate additional income and employment taxes payable as a result of TVA’s payments under to the Financial Counseling Services Program.  See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (31)  Represents a lump sum performance payment awarded for an improved nuclear power industry peer evaluation of Watts Bar Nuclear Plant in 2009. (32)  Represents $164,640 awarded under the EAIP and $393,750 awarded under the ELTIP. (33)  Represents increases of $27,674 under the CBBS and $173,842 under the SERP. (34)  Represents $286,841 awarded under the EAIP and $171,092 awarded under the ELTIP. (35)  Represents increases of $39,260 under the CBBS and $272,601 under the SERP. (36)  Represents a credit in the amount of $175,000 that vests on September 30, 2014, which was provided under a LTDCP agreement with Mr. Bhatnagar, $11,745 in vehicle allowance payments, and $3,705 in 401(k) employer matching contributions.  See information regarding the details of the LTDCP agreement under “Long-Term Deferred Compensation Plan.” (37)  Represents $204,517 awarded under the EAIP and $171,092 awarded under the ELTIP. (38)  Represents increases of $36,696 under the CBBS and $209,196 under the SERP. (39)  Represents $258,340 awarded under the EAIP and $145,321 awarded under the ELTIP. (40)  Represents increases of $14,284 under the CBBS and $14,942 under the SERP.  |
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| Grants of Plan-Based Awards Table                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards (1) |
|   Name(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Plan(b) |  Threshold (2)($)(c) |  Target (2)($)(d) |  Maximum 2($)(e) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Tom Kilgore                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | EAIP (3)ELTIP (4) | $425,000$637,500 | $850,000$1,275,000 | $1,275,000$1,912,500 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| John M. Thomas, III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | EAIP (3)ELTIP (4) | $169,000$325,000 | $338,000$650,000 | $507,000$975,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| John M. Hoskins                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | EAIP (3)ELTIP (4) | $54,400$34,000 | $108,800$68,000 | $163,200$102,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Kimberly S. Greene                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | EAIP (3)ELTIP (4) | $195,000$390,000 | $390,000$780,000 | $585,000$1,170,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| William R. McCollum, Jr.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | EAIP (3)ELTIP (4) | $260,930$372,757 | $521,860$745,514 | $782,790$1,118,271 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Preston D. Swafford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | EAIP (3)ELTIP (4) | $210,000$262,500 | $420,000$525,000 | $630,000$787,500 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
| Ashok S. Bhatnagar                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | EAIP (3)ELTIP (4) | $136,874$114,062 | $273,748$228,123 | $410,622$342,185 |
|  Notes(1)  TVA does not have any equity securities and therefore has no equity-based awards. (2)  Threshold, Target, and Maximum represent amounts that could be earned by an NEO based on FY 2010 performance.  Actual EAIP awards earned for performance in 2010 are reported for each of the Named Executive Officers under “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table. (3)  Target incentive opportunities as a percentage of salaries were as follows:  Mr. Kilgore, 100%; Mr. Thomas, 65%; Mr. Hoskins, 40%; Ms. Greene, 60%; Mr. McCollum, 70%; Mr. Swafford, 80%; and Mr. Bhatnagar, 60%.  EAIP performance measures for 2010 were Net Cash Flow and Equivalent Availability Factor.  Actual EAIP awards earned for performance in 2010 are reported for each of the Named Executive Officers under “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table.  See Compensation Discussion and Analysis for a discussion of how each award was determined. (4)  Target incentive opportunities for the three-year performance cycle ended September 30, 2010 as a percentage of salaries were as follows: Mr. Kilgore, 150%; Mr. Thomas, 125%; Mr. Hoskins, 25%; Ms. Greene, 120%; Mr. McCollum, 100%; Mr. Swafford, 100%; and Mr. Bhatnagar, 50%.  ELTIP performance measures for the three-year cycle ended September 30, 2010, were Retail Rates and Connection Point Interruption.  Actual ELTIP awards earned for the performance cycle ended on September 30, 2010, are reported for each of the Named Executive Officers under “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table.  See Compensation Discussion and Analysis for a discussion of how each award was determined. |

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Retirement and Pension Plans

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Pension Benefits Table          |                                                                 |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                 |                                                                 |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |    Name(a)            |    Plan Name(b)                                       | Number ofYears of Credited Service (1)(#)(c) |   | Present Value of Accumulated Benefit($)(d) |   |  Payments During Last Year($)(e) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                 |                                                                 |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Tom Kilgore                | (1) Qualified Plan – CBBS(2) Non-Qualified – SERP Tier 1 | 5.588.58(2) |   | $72,375$2,422,058 |   | $0$0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | John M. Thomas, III        | (1) Qualified Plan – CBBS(2) Non-Qualified – SERP Tier 1 | 4.834.83 |   | $89,657$187,851 |   | $0$0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | John M. Hoskins            | (1) Qualified Plan – OBS(2) Non-Qualified – SERP Tier 2  | 36.7832.67 |   | $2,297,329$389,375 |   | $0$0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Kimberly S. Greene         | (1) Qualified Plan – CBBS(2) Non-Qualified – SERP Tier 1 | 3.0818.08(3) |   | $63,212$1,074,714 |   | $0$0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | William R. McCollum, Jr.   | (1) Qualified Plan – CBBS(2) Non-Qualified – SERP Tier 1 | 3.4213.42(4) |   | $50,399$2,704,040 |   | $0$0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Preston D. Swafford        | (1) Qualified Plan – CBBS(2) Non-Qualified – SERP Tier 1 | 4.429.42(5) |   | $85,415$839,533 |   | $0$0 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Ashok S. Bhatnagar         | (1) Qualified Plan – CBBS(2) Non-Qualified – SERP Tier 1 | 11.0811.08  |   | $188,517$1,051,726 |   | $0$0 |   |
|  Notes(1)  Limited to 24 years when determining supplemental benefits available under SERP Tier 1, described below. (2)  Mr. Kilgore has been granted three additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits associated with the additional three years of credited service has been waived.  In addition, the offset for benefits provided under TVA’s defined benefit plan will be calculated based on the actual pension benefit he will receive as a participant in the CBBS. (3)  Ms. Greene has been granted 15 additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits has been waived.  The offset for benefits provided under TVA’s defined benefit plan will be calculated based on the benefit she will be eligible to receive as a participant in the CBBS taking into account the additional years of credited service being used for SERP benefit calculation purposes.  In the event that Ms. Greene voluntarily terminates her employment with TVA or is terminated for cause prior to satisfying the minimum five-year vesting requirement, no benefits will be provided under the SERP.  In the event of termination for any other reason, prior to five years of employment, the five-year vesting requirement will be waived and the benefit Ms. Greene will be eligible to receive will be payable no earlier than age 55.  As of September 30, 2010, the present value of this benefit is 1,074,714.  Without the additional years of credited service, the present value of Ms. Greene’s accumulated benefit would be $0.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (4)  Mr. McCollum has been granted 10 additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits has been waived.  The additional years of credited service will be used for SERP benefit calculation purposes only and will not count toward the minimum five-year vesting requirement.  In the event Mr. McCollum voluntarily terminates his employment with TVA or is terminated for cause prior to satisfying the minimum five-year vesting requirement, no benefits will be provided under the SERP.  In the event of termination for any other reason, prior to five years of employment, the five-year vesting requirement will be waived as long as the termination is considered acceptable to TVA, and Mr. McCollum will be eligible to receive benefits payable in five annual installments following termination.  The present value of this benefit as of September 30, 2010, is $2,704,040.  Without waiving and granting the additional years of credited service, the present value of Mr. McCollum’s accumulated benefit would be $0. (5)  Mr. Swafford has been granted five additional years of credited service for pre-TVA employment and the offset for prior employer pension benefits has been waived.  The additional years of credited service will be used for SERP benefit calculation purposes only and will not count toward the minimum five-year vesting requirement.  In addition, the offset for benefits provided under TVA’s defined benefit plan will be calculated based on the benefit he would be eligible to receive as a participant in the CBBS taking into account the additional years of credited service being used for SERP benefit calculation purposes.  In the event Mr. Swafford voluntarily terminates his employment with TVA or is terminated for cause prior to satisfying the minimum five-year vesting requirement, no benefits will be provided under the SERP.  The present value of this benefit as of September 30, 2010, is $839,533.  Without the additional years of credited service, the present value of Mr. Swafford’s accumulated benefit would be $0.  |

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| Nonqualified Deferred Compensation Table                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    Name(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | ExecutiveContributions inLast FY($)(b) | RegistrantContributions inLast FY($)(c) | AggregateEarnings inLast FY (1)($)(d) | AggregateWithdrawals/Distributions($)(e) | AggregateBalance atLast FYE (2)($)(f) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |
| Tom Kilgore                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | $0 | $300,000(3) | $146,485 | $0 | $3,887,999(4) |
| John M. Thomas, III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $0 | $50,000(5) | $1,462 | $0 | $51,462(6) |
| John M. Hoskins                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $0 | $60,000(7) | $32,807 | $0 | $1,311,128(8) |
| Kimberly S. Greene                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $0 | $150,000(9) | $16,023 | $0 | $627,445(10) |
| William R. McCollum, Jr.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | $559,136 (11) | $200,000(12) | $182,525 | $0 | $3,193,267(13) |
| Preston D. Swafford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $98,438(14) | $125,000(15) | $27,244 | $0 | $1,088,566(16) |
| Ashok S. Bhatnagar                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $0 | $175,000(17) | $107,715 | $818,718(18) | $1,762,369(19) |
|  Notes(1) Includes vested and unvested earnings.  Because none of these amounts is above market earnings under SEC rules, none of these amounts is included in theSummary Compensation Table. (2) Includes vested and unvested contributions and earnings. (3) Represents an unvested annual credit in the amount of $300,000 provided under a LTDCP agreement with Mr. Kilgore (reported in the “All Other Compensation” column in the Summary Compensation Table). (4) Includes a total of $306,517 of contributions and earnings that were not vested as of September 30, 2010.  A total of $2,611,522 was reported as compensation to Mr. Kilgore in the Summary Compensation Tables in previous years.   (5)  Represents an unvested annual credit in the amount of $50,000 provided under a LTDCP agreement with Mr. Thomas (reported in the “All Other Compensation” column in the Summary Compensation Table). (6)  Contributions and earnings that were not vested as of September 30, 2010. (7)  Represents an unvested annual credit in the amount of $60,000 provided under a LTDCP agreement with Mr. Hoskins (reported in the “All Other Compensation” column in the Summary Compensation Table). (8)  Includes a total of $61,158 of contributions and earnings that were not vested as of September 30, 2010.  A total of $144,579 was reported as compensation to Mr. Hoskins in the Summary Compensation Table in previous years. (9)  Represents an unvested annual credit in the amount of $150,000 provided under two separate LTDCP agreements with Ms. Greene (reported in the “All Other Compensation” column in the Summary Compensation Table). (10) Includes a total of $313,285 of contributions and earnings that were not vested as of September 30, 2010.  A total of $430,000 was reported as compensation to Ms. Greene in the Summary Compensation Tables in previous years. (11) Mr. McCollum elected to defer 100 percent of the $559,136 to be awarded under the ELTIP for the performance cycle that ended on September 30, 2010 (reported in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table). (12) Represents an unvested annual credit in the amount of $200,000 provided under a LTDCP agreement with Mr. McCollum (reported in the “All Other Compensation” column in the Summary Compensation Table). (13) Includes a total of $629,855 of contributions and earnings that were not vested as of September 30, 2010.  The amount reported in “Executive Contributions in Last FY” column will be credited to his account in the first quarter of 2011 and is not included in the balance.  A total of $2,842,486 was reported as compensation to Mr. McCollum in the Summary Compensation Tables in previous years. (14) Mr. Swafford elected to defer 25 percent of the $393,750 to be awarded under the ELTIP for the performance cycle that ended on September 30, 2010 (reported in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table). (15) Represents an unvested annual credit in the amount of $125,000 provided under a LTDCP agreement with Mr. Swafford (reported in the “All Other Compensation” column in the Summary Compensation Table). (16) Includes a total of $696,607 of contributions and earnings that were not vested as of September 30, 2010.  The amount reported in “Executive Contributions in Last FY” column will be credited to his account in the first quarter of 2011 and is not included in the balance.  A total of $223,438 was reported as compensation to Mr. Swafford in the Summary Compensation Tables in previous years. (17) Represents an unvested annual credit in the amount of $175,000 provided under a LTDCP agreement with Mr. Bhatnagar (reported in the “All Other Compensation” column in the Summary Compensation Table). (18) Represents a total of $818,718 of contributions and earnings that were provided under a LTDCP agreement with Mr. Bhatnagar that vested on September 30, 2009 and was paid out in the first quarter of fiscal year 2010. (19)   Includes a total of $178,403 of contributions and earnings that wee not vested as of September 30, 2010.  A total of $683,452 was reported as compensation to Mr. Bhatnagar in the Summary Compensation Tables in previous years.  |

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Table of Contents

Potential Payments on Account of Retirement/Resignation, Termination without Cause, Termination with Cause, or Death/Disability

|  Tom Kilgore                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  $0                           |  $2,975,000               |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  $0                           |  $306,517                 |  $0                    |  $306,517          |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  $2,422,058(2)                |  $2,422,058(2)            |  $2,422,058(2)         |  $2,422,058(3)     |
|  Deferred Compensation(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  $3,851,482                   |  $3,851,482               |  $3,851,482            |  $3,851,482        |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $6,003,540                   |  $9,285,057               |  $6,003,540            |  $6,310,057        |
|  Notes (1) In January 2005, TVA entered into an agreement with Mr. Kilgore that provides a lump-sum payment equal to one year’s annual compensation if (1) his duties,responsibilities, or compensation is substantially reduced, and he terminates his employment with TVA, or (2) his employment is terminated for any reason other than “for cause.”  For purposes of this agreement, “annual compensation” is defined as annual salary plus the amount of the annual and long-term incentive awards he would have been eligible to receive based on 100 percent achievement of target performance goals. (2) Represents the present value of the accumulated benefit.  Actual benefit would to be paid in five annual installments. (3) Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit. (4) Amounts that Mr. Kilgore earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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Table of Contents

|  John M. Thomas, III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  $0                           |  $0                       |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $0                           |  $0                       |  $0                    |  $51,462           |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  $0(2)                        |  $0(2)                    |  $0(2)                 |  $187,851(3)       |
|  Deferred Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $0                           |  $0                       |  $0                    |  $0                |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  $0                           |  $0                       |  $0                    |  $239,313          |
|  Notes (1) Mr. Thomas does not have a severance agreement with TVA. (2) Mr. Thomas has not yet vested in SERP. (3) Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit.  |

|  John M. Hoskins                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  $0                           |  $0                       |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  $0                           |  $61,158                  |  $0                    |  $61,158           |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  $389,375(2)                  |  $389,375(2)              |  $389,375(3)           |  $389,375(4)       |
|  Deferred Compensation (5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  $1,249,970                   |  $1,249,970               |  $1,249,970            |  $1,249,970        |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  $1,639,345                   |  $1,700,503               |  $1,639,345            |  $1,700,503        |
|  Notes(1) Mr. Hoskins does not have a severance agreement with TVA. (2) Represents the present value of the accumulated benefit and assumes the termination is an approved termination under SERP.  If the termination had taken place on September 30, 2010, the benefit would, however, have been reduced by 5/12 percent for each month between September 30, 2010, and October 31, 2017 (age 62).  Actual benefit would to be paid in 10 annual installments. (3)  Represents the present value of the accumulated benefit and assumes the termination is an approved termination under SERP.  If the termination is not an approved termination under SERP, the benefit will be reduced in the manner discussed above in Retirement and Pension Plans - Supplemental Executive Retirement Plan.  Actual benefit would be paid in 10 annual installments. (4) Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit. (5) Amounts that Mr. Hoskins earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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Table of Contents

|  Kimberly S. Greene                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $0                           |  $2,080,000               |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  $0                           |  $313,285                 |  $0                    |  $313,285          |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  $0                           |  $1,074,714(2)            |  $0                    |  $1,074,714(3)     |
|  Deferred Compensation(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  $314,160                     |  $314,160                 |  $314,160              |  $314,160          |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  $314,160                     |  $3,782,159               |  $314,160              |  $1,702,159        |
|  Notes (1)  In August 2007, TVA entered into an agreement with Ms. Greene that provides a lump-sum payment in an amount equal to two years’ annual compensation in the event that TVA’s current Chief Executive Officer no longer occupies that position and Ms. Greene is asked to leave TVA employment for any reason other than for cause.  For purposes of this agreement, “annual compensation” is defined as annual salary plus the amount of the annual incentive award based on 100 percent achievement of target performance goals. (2)  Represents the present value of the accumulated benefit and assumes the termination is an approved termination under SERP.  If the termination had taken place on September 30, 2010, the benefit would, however, have been reduced by 5/12 percent for each month from October 5, 2021 (age 55) to October 5, 2028 (age 62).  Actual benefit would to be paid in five annual installments. (3)  Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit. (4) Amounts that Ms. Greene earned in past years but elected to defer, which are payable pursuant to elections she made and applicable IRS rules.  |

|  William R. McCollum, Jr.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  $0                           |  $0                       |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  $0                           |  $629,855                 |  $0                    |  $629,855          |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  $0(2)                        |  $0(2)                    |  $0(2)                 |  $2,704,040(3)     |
|  Deferred Compensation(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $2,563,412                   |  $2,563,412               |  $2,563,412            |  $2,563,412        |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  $2,563,412                   |  $3,193,267               |  $2,563,412            |  $5,897,307        |
|  Notes(1)  Mr. McCollum does not have a severance agreement with TVA. (2)  Mr. McCollum has not yet vested in SERP. (3)  Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive alump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit. (4)  Amounts that Mr. McCollum earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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Table of Contents

|  Preston D. Swafford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  $0                           |  $0                       |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  $696,607                     |  $696,607                 |  $696,607              |  $696,607          |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  $0(2)                        |  $0(2)                    |  $0(2)                 |  $839,543(3)       |
|  Deferred Compensation(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  $391,959                     |  $391,959                 |  $391,959              |  $391,959          |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  $1,088,566                   |  $1,088,566               |  $1,088,566            |  $1,928,109        |
|  Notes (1)  Mr. Swafford does not have a severance agreement with TVA. (2)  Mr. Swafford has not yet vested in SERP. (3)  Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit. (4)  Amounts that Mr. Swafford earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.  |

|  Ashok S. Bhatnagar                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  Retirement/Resignation  |  Terminationwithout Cause |  Terminationwith Cause |  Death/ Disability |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|--------------------------------|-----------------------------|-------------------------|
|  Severance Agreement(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  $0                           |  $0                       |  $0                    |  $0                |
|  LTDCP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  $0                           |  $178,403                 |  $0                    |  $178,403          |
|  SERP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  $1,051,726(2)                |  $1,051,726(2)            |  $1,051,726(3)         |  $1,051,726(4)     |
|  Deferred Compensation(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  $1,583,966                   |  $1,583,966               |  $1,583,966            |  $1,583,966        |
|  Total Value of Potential Payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  $2,635,692                   |  $2,814,095               |  $2,635,692            |  $2,814,095        |
|  Notes(1) Mr. Bhatnagar does not have a severance agreement with TVA. (2) Represents the present value of the accumulated benefit and assumes the termination is an approved termination under SERP.  If the termination had taken place on September 30,2010, the benefit would, however, have been reduced by 5/12 percent for each month between September 30, 2010, and May 16, 2018 (age 62).  Actual benefit to be paid in 10 annual installments. (3)  Represents the present value of the accumulated benefit and assumes the termination is an approved termination under SERP.  If the termination is not an approved termination under SERP, the benefit will be reduced in the manner discussed above in Retirement and Pension Plans - Supplemental Executive Retirement Plan.  Actual benefit would be paid in 10 annual installments. (4) Represents the present value of the accumulated benefit.  In the event of death while employed by TVA, the beneficiary will receive a lump sum payment equal to the actuarial equivalent of the benefit that would have been paid had the participant terminated employment on the date of death and elected a joint and 50 percent survivors benefit. (5) Amounts that Mr. Bhatnagar earned in past years but elected to defer, which are payable pursuant to elections he made and applicable IRS rules.  |

Other Agreements

Director Compensation

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Table of Contents

| TVA Board Annual Stipends |
|---------------------------|
|                      |   |   |
|  Name                |   | Annual Stipend($) |
|                      |   |   |
| Dennis C. Bottorff        |   | $54,500 |
| Marilyn A. Brown          |   | $50,000 |
| Robert M. Duncan          |   | $50,000 |
| Thomas C. Gilliland       |   | $50,000 |
| Bishop William H. Graves  |   | $50,000 |
| Barbara S. Haskew         |   | $48,900 |
| Neil G. McBride           |   | $48,900 |
| William B. Sansom         |   | $50,000 |
| Howard A. Thrailkill      |   | $48,900 |

|  Director Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         Name(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |      Fees Earned or Paid in Cash($)(b) |       StockAwards($)(c) |       OptionAwards($)(d) |      Non-EquityIncentive PlanCompensation($)(e) |  Change inPension ValueandNonqualifiedDeferredCompensationEarnings (1)($)(f) |       All Other Compensation($)(g) |        Total($)(h) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |
| Dennis C. Bottorff(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $51,717 |  |  |  |  | $517 | $52,234 |
| Robert M. Duncan(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $52,800 |  |  |  |  | $528 | $53,328 |
| Thomas C. Gilliland                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $50,038 |  |  |  |  | $500 | $50,538 |
| Bishop William H. Graves                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $50,038 |  |  |  |  | $500 | $50,538 |
| William B. Sansom(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $11,319 |  |  |  |  | $124 | $11,443 |
| Howard A. Thrailkill(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | $50,038 |  |  |  |  | $2,501 | $52,539 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |
|  Notes(1)  TVA directors do not participate in the TVA Retirement System, TVA’s SERP, or any non-qualified deferred compensation plan available to TVAemployees.  However, as appointed officers of the United States government, the directors are members of the Federal Employees Retirement System“FERS”).  FERS is administered by the federal Office of Personnel Management, and information regarding the value of FERS pension benefits is not available toTVA. (2)  Mr. Bottorff became Chairman on May 19, 2010. (3)  Mr. Duncan resigned the Chairmanship of the Board effective May 18, 2010, but continued to served a as a director. (4)  Mr. Sansom’s term as Chairman expired on May 19, 2009, but he continued to serve as a director until the end of the current session of Congress on December 24, 2009.  He began his second term on the TVA Board in October 2010. (5)  Mr. Thrailkill's term as a director expired on May 19, 2010, but he is entitled to remain in office until the end of the current session of Congress or until a successor takes office.  |

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Table of Contents

Compensation Committee Interlocks and Insider Participation

Compensation Committee Report

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director Independence

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Table of Contents

Related Party Transactions

| 1.   | For purposes of this policy, “financial interest” means an interest of a person, or of a person’s spouse or minor child, arising by virtue of investment or credit relationship, ownership, employment, consultancy, or fiduciary relationship such as director, trustee, or partner.  However, financial interest does not include an interest in TVA or any interest: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | comprised solely of a right to payment of retirement benefits resulting from former employment or fiduciary relationship; |
|---------------------|---------------------------------------------------------------------------------------------------------------------------|

| •   | arising solely by virtue of cooperative membership or similar interest as a consumer in a distributor of TVA power; or |
|---------------------|------------------------------------------------------------------------------------------------------------------------|

| •   | arising by virtue of ownership of publicly traded securities in any single entity with a value of $25,000 or less, or within a diversified mutual fund investment in any amount. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Directors and the Chief Executive Officer shall not hold a financial interest in any distributor of TVA power. |
|----------------|----------------------------------------------------------------------------------------------------------------|

| 3.   | Directors and the Chief Executive Officer shall not hold a financial interest in any entity engaged in the wholesale or retail generation, transmission, or sale of electricity. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

| 4.   | Directors and the Chief Executive Officer shall not hold a financial interest in any entity that may reasonably be perceived as likely to be adversely affected by the success of TVA as a producer or transmitter of electric power. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Any action taken or interest held that creates, or may reasonably be perceived as creating, a conflict of interest restricted by this additional policy applicable to TVA Directors and the Chief Executive Officer should immediately be disclosed to the Chairman of Board of Directors and the Chairman of the Audit, Governance, and Ethics Committee (now the Audit, Risk, and Regulation Committee).  The Audit, Governance, and Ethics Committee (now the Audit, Risk, and Regulation Committee) shall be responsible for initially reviewing all such disclosures and making recommendations to the entire Board on what action, if any, should be taken.  The entire Board, without the vote of any Director(s) involved, shall determine the appropriate action to be taken. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.   | Any waiver of this additional policy applicable to TVA Directors and the Chief Executive Officer may be made only by the Board, and will be disclosed promptly to the public, subject to the limitations on disclosure imposed by law. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

| Principal Accountant Fees and Services(in actual dollars)                                                                                                                                                                                                                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Year                                                                                                                                                                                                                                                                                                                                                     | Principal Accountant | Audit Fees(1) | Audit-Related Fees(2) | All Other Fees | Total |
| 2010                                                                                                                                                                                                                                                                                                                                                     | Ernst & Young LLP | $2,090,325 | $      — | — | $2,090,325 |
| 2009                                                                                                                                                                                                                                                                                                                                                     | Ernst & Young LLP | $2,125,603 | $      — | — | $2,125,603 |
|  Notes(1)  Audit fees consist of fees for professional services rendered in connection with the audit of internal control over financial reporting, and of TVA's annualfinancial statements, review of the interim financial statements included in TVA'squarterly reports, and services relating to Bond offering comfort letters.  |

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Table of Contents

| •   | The aggregate amount of all such non-audit services provided to TVA does not exceed 5 percent of the total amount TVA pays the external auditor during the fiscal year in which the non-audit services are provided; |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Such services were not recognized by TVA at the time of the engagement to be non-audit services or non-audit related services; and |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------|

| •   | Such services are promptly brought to the attention of the Audit, Risk, and Regulation Committee and approved at the next scheduled Audit, Risk, and Regulation Committee meeting or by one or more members of the Audit, Risk, and Regulation Committee to whom the authority to grant such approvals has been delegated. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Bookkeeping or other services related to the accounting records or financial statements of TVA; |
|---------------------|-------------------------------------------------------------------------------------------------|

| •   | Financial information system design and implementation; |
|---------------------|---------------------------------------------------------|

| •   | Appraisal or valuation services, fairness opinions, and contribution-in-kind reports; |
|---------------------|---------------------------------------------------------------------------------------|

| •   | Actuarial services; |
|---------------------|---------------------|

| •   | Internal audit outsourcing services; |
|---------------------|--------------------------------------|

| •   | Management functions or human resources; |
|---------------------|------------------------------------------|

| •   | Broker or dealer, investment adviser, or investment banking services; |
|---------------------|-----------------------------------------------------------------------|

| •   | Legal services and expert services unrelated to the audit; and |
|---------------------|----------------------------------------------------------------|

| •   | Any other services that the Public Company Accounting Oversight Board determines, by regulation, is impermissible. |
|---------------------|--------------------------------------------------------------------------------------------------------------------|

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Table of Contents

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

| Schedules not included are omitted because they are not required or because the required information is provided in the financial statements, including the notes thereto. Schedule II — Valuation and Qualifying Accounts(in millions) |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   Description                                                                                                                                                                                                                            |   |  Balance at beginning of year |   |   | Additions charged to expense |   |   |   Deductions |   |   |   Balance at end of year |   |
| For the year ended September 30, 2010                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for doubtful accounts                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|     Receivables                                                                                                                                                                                                                |   | $ | 2 |   |   | $ | —  |   |   | $ | — |   |   | $ | 2 |   |
|     Loans                                                                                                                                                                                                                      |   |   | 13 |   |   |   | 1 |   |   |   | (1 | ) |   |   | 13 |   |
|                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total allowances deducted from assets                                                                                                                                                                                                              |   | $ | 15 |   |   | $ | 1 |   |   | $ | (1 | ) |   | $ | 15 |   |
|                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For the year ended September 30, 2009                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for doubtful accounts                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Receivables                                                                                                                                                                                                                |   | $ | 2 |   |   | $ | — |   |   | $ | — |   |   | $ | 2 |   |
|     Loans                                                                                                                                                                                                                      |   |   | 13 |   |   |   | 1 |   |   |   | (1 | ) |   |   | 13 |   |
|                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total allowances deducted from assets                                                                                                                                                                                                              |   | $ | 15 |   |   | $ | 1 |   |   | $ | (1 | ) |   | $ | 15 |   |
|                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| For the year ended September 30, 2008                                                                                                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for doubtful accounts                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Receivables                                                                                                                                                                                                                |   | $ | 2 |   |   | $ | 1 |   |   | $ | (1 | ) |   | $ | 2 |   |
|     Loans                                                                                                                                                                                                                      |   |   | 15 |   |   |   | 4 |   |   |   | (6 | ) |   |   | 13 |   |
|                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total allowances deducted from assets                                                                                                                                                                                                        |   | $ | 17 |   |   | $ | 5 |   |   | $ | (7 | ) |   | $ | 15 |   |

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Table of Contents

| Exhibit  No.  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                          | Tennessee Valley Authority Act of 1933, as amended , 16 U.S.C. §§ 831-831ee (Incorporated by reference to Exhibit 3.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.2                          | Bylaws of Tennessee Valley Authority, as Amended (Incorporated by reference to Exhibit 3.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.1                          | Basic Tennessee Valley Authority Power Bond Resolution Adopted by the TVA Board of Directors on October 6, 1960, as Amended on September 28, 1976, October 17, 1989, and March 25, 1992 (Incorporated by reference to Exhibit 4.1 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.1*                        | Fall Maturity Credit Agreement Dated as of March 26, 2009, Among TVA, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 10.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                     |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.2*                        | Amendment Dated as of November 9, 2009, to Fall Maturity Credit Agreement Dated as of March 26, 2009, Among TVA, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 99.1 to TVA’s Current Report on Form 8-K filed on November 13, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                       |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.3                         | Second Amendment Dated as of October 7, 2010, to Fall Maturity Credit Agreement Dated as of March 26, 2009, and Amended as of November 9, 2009, Among TVA, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 99.1 to TVA’s Current Report on Form 8-K filed on October 12, 2010, File No. 000-52313)                                                                                                                                                                                                                                                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.4                         | Spring Maturity Credit Agreement Dated as of July 22, 2010, Among TVA, Bank of America, N.A., as Administrative Agent and Letter of Credit Issuer, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 10.5  to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.5                         | TVA Discount Notes Selling Group Agreement (Incorporated by reference to Exhibit 10.2 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.6                         | Electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.4 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                          |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.7                         | Assumption Agreement Between TVA and Incapital LLC Dated as of February 29, 2008, Relating to the electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, File No. 000-52313) |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.8                         | Commitment Agreement Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 19, 2003 (Incorporated by reference to Exhibit 10.5 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.9                         | Power Contract Supplement No. 95 Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 19, 2003 (Incorporated by reference to Exhibit 10.6 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.10                        | Void Walk Away Agreement Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 20, 2003 (Incorporated by reference to Exhibit 10.7 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                         |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.11                        | Power Contract Supplement No. 96 Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 20, 2003 (Incorporated by reference to Exhibit 10.8 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.12*                       | Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.3 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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Table of Contents

| 10.13        | Supplement No. 1 Dated as of September 2, 2008, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.16 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.14        | Supplement No. 2 Dated as of September 30, 2008, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.17 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.15        | Supplement No. 3 Dated as of April 17, 2009, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA  (Incorporated by reference to Exhibit 10.15 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.16        | Supplement No. 4 Dated as of April 22, 2010, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.2 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.17        | Lease Agreement Dated as of September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.18 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.18        | First Amendment Dated as of April 17, 2009, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.17 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.19        | Second Amendment Dated as of April 22, 2010, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.3 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.20        | Amended and Restated Buy-Back Arrangements Dated as of April 22, 2010, Among TVA, JPMorgan Chase Bank, National Association, as Administrative Agent and a Lender, and the Other Lenders Referred to Therein (Incorporated by reference to Exhibit 10.4 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.21        | Overview of TVA’s September 26, 2003, Lease and Leaseback of Control, Monitoring, and Data Analysis Network with Respect to TVA’s Transmission System in Tennessee, Kentucky, Georgia, and Mississippi (Incorporated by reference to Exhibit 10.9 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.22*       | Participation Agreement Dated as of September 22, 2003, Among (1) TVA, (2) NVG Network I Statutory Trust, (3) Wells Fargo Delaware Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Owner Trustee, (4) Wachovia Mortgage Corporation, (5) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Lease Indenture Trustee, and (6) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Pass Through Trustee (Incorporated by reference to Exhibit 10.10 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.23*       | Network Lease Agreement Dated as of September 26, 2003, Between NVG Network I Statutory Trust, as Owner Lessor, and TVA, as Lessee (Incorporated by reference to Exhibit 10.11 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.24*       | Head Lease Agreement Dated as of September 26, 2003, Between TVA, as Head Lessor, and NVG Network I Statutory Trust, as Head Lessee (Incorporated by reference to Exhibit 10.12 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.25*       | Leasehold Security Agreement Dated as of September 26, 2003, Made by NVG Network I Statutory Trust to TVA (Incorporated by reference to Exhibit 10.13 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.26† | TVA Compensation Plan Approved by the TVA Board on May 31, 2007 (Incorporated by reference to Exhibit 99.3 to TVA’s Current Report on Form 8-K filed on December 11, 2007, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.27† | TVA Vehicle Allowance Guidelines, Effective April 1, 2006 (Incorporated by reference to Exhibit 10.18 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.28† | Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.1 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.29† | Executive Annual Incentive Plan (Incorporated by reference to Exhibit 10.3 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.30† | Executive Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.4 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

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Table of Contents

| 10.31†             | Long - Term Deferred Compensation Plan (Incorporated by reference to Exhibit 10.5 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                  |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                                                                                                                       |
| 10.32†             | Deferred Compensation Plan (Incorporated by reference to Exhibit 10.2 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                              |
|                     |                                                                                                                                                                                                                                                       |
| 10.33†             | Overview of Financial Counseling Services Program (Incorporated by reference to Exhibit 10.31 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                                                         |
|                     |                                                                                                                                                                                                                                                       |
| 10.34†             | Offer Letter to Tom Kilgore Accepted as of January 19, 2005 (Incorporated by reference to Exhibit 10.19 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                               |
|                |                                                                                                                                                                                                                                                       |
| 10.35†             | Offer Letter to William R. McCollum, Jr., Accepted as of March 9, 2007 (Incorporated by reference to Exhibit 10.26 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                                    |
|                     |                                                                                                                                                                                                                                                       |
| 10.36†             | Offer Letter to Kimberly S. Greene Accepted as of August 3, 2007 (Incorporated by reference to Exhibit 10.27 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                                          |
|                     |                                                                                                                                                                                                                                                       |
| 10.37†             | First Deferral Agreement Between TVA and Tom Kilgore Dated as of March 29, 2005 (Incorporated by reference to Exhibit 10.24 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                           |
|                     |                                                                                                                                                                                                                                                       |
| 10.38†             | Second Deferral Agreement  Between TVA and Tom Kilgore Dated as of November 24, 2009  (Incorporated by reference to Exhibit 10.39 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313) |
|                     |                                                                                                                                                                                                                                                       |
| 10.39†   | Deferral Agreement Between TVA and John M. Thomas, III, Dated as of December 4, 2009  (Incorporated by reference to Exhibit 10.7 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)           |
|                     |                                                                                                                                                                                                                                                       |
|  10.40†       |  Second Deferral Agreement Between TVA and John M. Thomas, III, Dated as of September 27, 2010                                                                                                                                                        |
|                     |                                                                                                                                                                                                                                                       |
| 10.41†             | Deferral Agreement Between TVA and Ashok S. Bhatnagar Dated as of September 28, 2004 (Incorporated by reference to Exhibit 10.21 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                      |
|                     |                                                                                                                                                                                                                                                       |
| 10.42†             | Second Deferral Agreement Between TVA and Ashok S. Bhatnagar Dated as of January 27, 2010 (Incorporated by reference to Exhibit 10.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 000-52313)                |
|                     |                                                                                                                                                                                                                                                       |
| 10.43†             | Deferral Agreement Between TVA and William R. McCollum, Jr., Dated as of May 3, 2007 (Incorporated by reference to Exhibit 10.33 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                      |
|                     |                                                                                                                                                                                                                                                       |
| 10.44†             | First Deferral Agreement Between TVA and Kimberly S. Greene Dated as of September 4, 2007 (Incorporated by reference to Exhibit 10.34 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                 |
|                     |                                                                                                                                                                                                                                                       |
| 10.45†             | Second Deferral Agreement Between TVA and Kimberly S. Greene Dated as of December 20, 2008 (Incorporated by reference to Exhibit 10.43 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                |
|                     |                                                                                                                                                                                                                                                       |
| 10.46†             | Deferral Agreement Between TVA and Preston D. Swafford Dated as of May 10, 2006 (Incorporated by reference to Exhibit 10.44 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                           |
|                     |                                                                                                                                                                                                                                                       |
| 10.47†             | Deferral Agreement Between TVA and John M. Hoskins Dated as of October 30, 2006 (Incorporated by reference to Exhibit 10.35 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                           |
|                     |                                                                                                                                                                                                                                                       |
| 10.48†             | Second Deferral Agreement Between TVA and John M. Hoskins Dated as of January 27, 2010                                                                                                                                                                     |
|                     |                                                                                                                                                                                                                                                       |
| 14                       | Disclosure and Financial Ethics Code (Incorporated by reference to Exhibit 14 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                         |
|                     |                                                                                                                                                                                                                                                       |
| 31.1                     | Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Executive Officer                                                                                                                                                                             |
|                     |                                                                                                                                                                                                                                                       |
| 31.2                     | Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Financial Officer                                                                                                                                                                             |
|                     |                                                                                                                                                                                                                                                       |
| 32.1                     | Section 1350 Certification Executed by the Chief Executive Officer                                                                                                                                                                                         |

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Table of Contents

| 32.2                                                                                                                                                                                                                                                                                                                                | Section 1350 Certification Executed by the Chief Financial Officer |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                |                                                               |
|  † Management contract or compensatory arrangement. * Certain schedule(s) and/or exhibit(s) have been omitted.  The Tennessee Valley Authority hereby undertakes to furnish supplementally copies of any of the omitted schedules and/or exhibits upon request by the Securities and Exchange Commission. |

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Table of Contents

SIGNATURES

| Date:  November 19, 2010 |   | TENNESSEE VALLEY AUTHORITY            |
|------------------------------------|--------|---------------------------------------|
|                               |   | (Registrant)                          |
|                               |   |                                  |
|                               |   |                                  |
|                               | By:    |  /s/ Tom Kilgore                 |
|                               |   | Tom  Kilgore                |
|                               |   | President and Chief Executive Officer |

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Table of Contents

| Signature                                 | Title                                              | Date                          |
|-------------------------------------------|----------------------------------------------------|-------------------------------|
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Tom Kilgore                | President and Chief Executive Officer              | November 19, 2010             |
| Tom  Kilgore                    | (Principal Executive Officer)                      |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ John M. Thomas, III        | Chief Financial Officer                            | November 19, 2010             |
| John M. Thomas, III                       | (Principal Financial Officer)                      |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Steve Byone                | Vice President, Controller, and Chief Risk Officer | November 19, 2010             |
| Steve Byone                               | (Principal Accounting Officer)                     |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Dennis C. Bottorff         | Chairman and Director                              | November 19, 2010             |
| Dennis C. Bottorff                        |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Marilyn A. Brown           | Director                                           | November 19, 2010             |
| Marilyn A. Brown                          |                                               |                          |
|  /s/ Robert M. Duncan                |   Director                               |   November 19, 2010 |
| Robert M. Duncan                          |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Thomas C. Gilliland        | Director                                           | November 19, 2010             |
| Thomas C. Gilliland                       |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Bishop William H. Graves   | Director                                           | November 19, 2010             |
| Bishop William H. Graves                  |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Barbara S. Haskew          | Director                                           | November 19, 2010             |
| Barbara S. Haskew                         |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Neil G. McBride            | Director                                           | November 19, 2010             |
| Neil G. McBride                           |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ William B. Sansom          | Director                                           | November 19, 2010             |
| William B. Sansom                         |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |
|  /s/ Howard A. Thrailkill  | Director                                           | November 19, 2010             |
| Howard A. Thrailkill                      |                                               |                          |
|                                      |                                               |                          |
|                                      |                                               |                          |

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Table of Contents

EXHIBIT INDEX

| Exhibit  No.  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                          | Tennessee Valley Authority Act of 1933, as amended , 16 U.S.C. §§ 831-831ee (Incorporated by reference to Exhibit 3.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 3.2                          | Bylaws of Tennessee Valley Authority, as Amended (Incorporated by reference to Exhibit 3.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.1                          | Basic Tennessee Valley Authority Power Bond Resolution Adopted by the TVA Board of Directors on October 6, 1960, as Amended on September 28, 1976, October 17, 1989, and March 25, 1992 (Incorporated by reference to Exhibit 4.1 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.1*                        | Fall Maturity Credit Agreement Dated as of March 26, 2009, Among TVA, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 10.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                     |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.2*                        | Amendment Dated as of November 9, 2009, to Fall Maturity Credit Agreement Dated as of March 26, 2009, Among TVA, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 99.1 to TVA’s Current Report on Form 8-K filed on November 13, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                       |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.3                         | Second Amendment Dated as of October 7, 2010, to Fall Maturity Credit Agreement Dated as of March 26, 2009, and Amended as of November 9, 2009, Among TVA, Bank of America, N.A., as Administrative Agent, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 99.1 to TVA’s Current Report on Form 8-K filed on October 12, 2010, File No. 000-52313)                                                                                                                                                                                                                                                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.4                         | Spring Maturity Credit Agreement Dated as of July 22, 2010, Among TVA, Bank of America, N.A., as Administrative Agent and Letter of Credit Issuer, Bank of America, N.A., as a Lender, and the Other Lenders Party Thereto (Incorporated by reference to Exhibit 10.5  to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.5                         | TVA Discount Notes Selling Group Agreement (Incorporated by reference to Exhibit 10.2 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.6                         | Electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.4 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                          |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.7                         | Assumption Agreement Between TVA and Incapital LLC Dated as of February 29, 2008, Relating to the electronotes® Selling Agent Agreement Dated as of June 1, 2006, Among TVA, LaSalle Financial Services, Inc., A.G. Edwards & Sons, Inc., Citigroup Global Markets Inc., Edward D. Jones & Co., L.P., First Tennessee Bank National Association, J.J.B. Hilliard, W.L. Lyons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, and Wachovia Securities, LLC (Incorporated by reference to Exhibit 10.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, File No. 000-52313) |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.8                         | Commitment Agreement Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 19, 2003 (Incorporated by reference to Exhibit 10.5 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.9                         | Power Contract Supplement No. 95 Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 19, 2003 (Incorporated by reference to Exhibit 10.6 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.10                        | Void Walk Away Agreement Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 20, 2003 (Incorporated by reference to Exhibit 10.7 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                         |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.11                        | Power Contract Supplement No. 96 Among Memphis Light, Gas and Water Division, the City of Memphis, Tennessee, and TVA Dated as of November 20, 2003 (Incorporated by reference to Exhibit 10.8 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.12*                       | Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.3 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

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Table of Contents

| 10.13        | Supplement No. 1 Dated as of September 2, 2008, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.16 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.14        | Supplement No. 2 Dated as of September 30, 2008, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.17 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.15        | Supplement No. 3 Dated as of April 17, 2009, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA  (Incorporated by reference to Exhibit 10.15 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.16        | Supplement No. 4 Dated as of April 22, 2010, to the Joint Ownership Agreement Dated as of April 30, 2008, Between Seven States Power Corporation and TVA (Incorporated by reference to Exhibit 10.2 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.17        | Lease Agreement Dated as of September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.18 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2008, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.18        | First Amendment Dated as of April 17, 2009, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.17 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.19        | Second Amendment Dated as of April 22, 2010, to Lease Agreement Dated September 30, 2008, Between TVA and Seven States Southaven, LLC (Incorporated by reference to Exhibit 10.3 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.20        | Amended and Restated Buy-Back Arrangements Dated as of April 22, 2010, Among TVA, JPMorgan Chase Bank, National Association, as Administrative Agent and a Lender, and the Other Lenders Referred to Therein (Incorporated by reference to Exhibit 10.4 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.21        | Overview of TVA’s September 26, 2003, Lease and Leaseback of Control, Monitoring, and Data Analysis Network with Respect to TVA’s Transmission System in Tennessee, Kentucky, Georgia, and Mississippi (Incorporated by reference to Exhibit 10.9 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.22*       | Participation Agreement Dated as of September 22, 2003, Among (1) TVA, (2) NVG Network I Statutory Trust, (3) Wells Fargo Delaware Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Owner Trustee, (4) Wachovia Mortgage Corporation, (5) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Lease Indenture Trustee, and (6) Wilmington Trust Company, Not in Its Individual Capacity, Except to the Extent Expressly Provided in the Participation Agreement, But as Pass Through Trustee (Incorporated by reference to Exhibit 10.10 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313) |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.23*       | Network Lease Agreement Dated as of September 26, 2003, Between NVG Network I Statutory Trust, as Owner Lessor, and TVA, as Lessee (Incorporated by reference to Exhibit 10.11 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.24*       | Head Lease Agreement Dated as of September 26, 2003, Between TVA, as Head Lessor, and NVG Network I Statutory Trust, as Head Lessee (Incorporated by reference to Exhibit 10.12 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.25*       | Leasehold Security Agreement Dated as of September 26, 2003, Made by NVG Network I Statutory Trust to TVA (Incorporated by reference to Exhibit 10.13 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.26† | TVA Compensation Plan Approved by the TVA Board on May 31, 2007 (Incorporated by reference to Exhibit 99.3 to TVA’s Current Report on Form 8-K filed on December 11, 2007, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.27† | TVA Vehicle Allowance Guidelines, Effective April 1, 2006 (Incorporated by reference to Exhibit 10.18 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.28† | Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.1 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.29† | Executive Annual Incentive Plan (Incorporated by reference to Exhibit 10.3 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 10.30† | Executive Long-Term Incentive Plan (Incorporated by reference to Exhibit 10.4 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

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| 10.31†             | Long - Term Deferred Compensation Plan (Incorporated by reference to Exhibit 10.5 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                  |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                                                                                                                       |
| 10.32†             | Deferred Compensation Plan (Incorporated by reference to Exhibit 10.2 to TVA’s Current Report on Form 8-K filed on January 6, 2009, File No. 000-52313)                                                                                              |
|                     |                                                                                                                                                                                                                                                       |
| 10.33†             | Overview of Financial Counseling Services Program (Incorporated by reference to Exhibit 10.31 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                                                         |
|                     |                                                                                                                                                                                                                                                       |
| 10.34†             | Offer Letter to Tom Kilgore Accepted as of January 19, 2005 (Incorporated by reference to Exhibit 10.19 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                               |
|                |                                                                                                                                                                                                                                                       |
| 10.35†             | Offer Letter to William R. McCollum, Jr., Accepted as of March 9, 2007 (Incorporated by reference to Exhibit 10.26 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                                    |
|                     |                                                                                                                                                                                                                                                       |
| 10.36†             | Offer Letter to Kimberly S. Greene Accepted as of August 3, 2007 (Incorporated by reference to Exhibit 10.27 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                                          |
|                     |                                                                                                                                                                                                                                                       |
| 10.37†             | First Deferral Agreement Between TVA and Tom Kilgore Dated as of March 29, 2005 (Incorporated by reference to Exhibit 10.24 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                           |
|                     |                                                                                                                                                                                                                                                       |
| 10.38†             | Second Deferral Agreement  Between TVA and Tom Kilgore Dated as of November 24, 2009  (Incorporated by reference to Exhibit 10.39 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313) |
|                     |                                                                                                                                                                                                                                                       |
| 10.39†   | Deferral Agreement Between TVA and John M. Thomas, III, Dated as of December 4, 2009  (Incorporated by reference to Exhibit 10.7 to TVA’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 000-52313)           |
|                     |                                                                                                                                                                                                                                                       |
|  10.40†       |  Second Deferral Agreement Between TVA and John M. Thomas, III, Dated as of September 27, 2010                                                                                                                                                        |
|                     |                                                                                                                                                                                                                                                       |
| 10.41†             | Deferral Agreement Between TVA and Ashok S. Bhatnagar Dated as of September 28, 2004 (Incorporated by reference to Exhibit 10.21 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                      |
|                     |                                                                                                                                                                                                                                                       |
| 10.42†             | Second Deferral Agreement Between TVA and Ashok S. Bhatnagar Dated as of January 27, 2010 (Incorporated by reference to Exhibit 10.1 to TVA’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 000-52313)                |
|                     |                                                                                                                                                                                                                                                       |
| 10.43†             | Deferral Agreement Between TVA and William R. McCollum, Jr., Dated as of May 3, 2007 (Incorporated by reference to Exhibit 10.33 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                      |
|                     |                                                                                                                                                                                                                                                       |
| 10.44†             | First Deferral Agreement Between TVA and Kimberly S. Greene Dated as of September 4, 2007 (Incorporated by reference to Exhibit 10.34 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                 |
|                     |                                                                                                                                                                                                                                                       |
| 10.45†             | Second Deferral Agreement Between TVA and Kimberly S. Greene Dated as of December 20, 2008 (Incorporated by reference to Exhibit 10.43 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                |
|                     |                                                                                                                                                                                                                                                       |
| 10.46†             | Deferral Agreement Between TVA and Preston D. Swafford Dated as of May 10, 2006 (Incorporated by reference to Exhibit 10.44 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2009, File No. 000-52313)                           |
|                     |                                                                                                                                                                                                                                                       |
| 10.47†             | Deferral Agreement Between TVA and John M. Hoskins Dated as of October 30, 2006 (Incorporated by reference to Exhibit 10.35 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2007, File No. 000-52313)                           |
|                     |                                                                                                                                                                                                                                                       |
| 10.48†             | Second Deferral Agreement Between TVA and John M. Hoskins Dated as of January 27, 2010                                                                                                                                                                     |
|                     |                                                                                                                                                                                                                                                       |
| 14                       | Disclosure and Financial Ethics Code (Incorporated by reference to Exhibit 14 to TVA’s Annual Report on Form 10-K for the year ended September 30, 2006, File No. 000-52313)                                                                         |
|                     |                                                                                                                                                                                                                                                       |
| 31.1                     | Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Executive Officer                                                                                                                                                                             |
|                     |                                                                                                                                                                                                                                                       |
| 31.2                     | Rule 13a-14(a)/15d-14(a) Certification Executed by the Chief Financial Officer                                                                                                                                                                             |
|                     |                                                                                                                                                                                                                                                       |
| 32.1                     | Section 1350 Certification Executed by the Chief Executive Officer                                                                                                                                                                                         |

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| 32.2                                                                                                                                                                                                                                                                                                                                | Section 1350 Certification Executed by the Chief Financial Officer |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                |                                                               |
|  † Management contract or compensatory arrangement. * Certain schedule(s) and/or exhibit(s) have been omitted.  The Tennessee Valley Authority hereby undertakes to furnish supplementally copies of any of the omitted schedules and/or exhibits upon request by the Securities and Exchange Commission. |

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