##### 



® ® ®




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$3,000,000,000
 MAXIMUM AGGREGATE PRINCIPAL AMOUNT OUTSTANDING
 electronotes ®
 TENNESSEE VALLEY AUTHORITY POWER BONDS WITH MATURITIES OF ONE
YEAR TO THIRTY YEARS FROM DATE OF ISSUE
 SELLING AGENT AGREEMENT




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® ® ®
 ® ®
  2




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I. Appointment of Agents
    3




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II. Conditions of the Obligations of the Agents
       4




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5




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®
  6




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®
        7




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8




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9




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III. Covenants of the Company
        10




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11




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IV. Offering by Agents
 Solicitations as Agent
  Purchases as Principal
 12




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Public Offering Price
 Procedures
 13




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Offering Circular Delivery
 Compliance With Laws
 V. Representations and Warranties of the Company
    14




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®
 15




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VI. Indemnification and Contribution
   16




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17




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VII. Termination; Survival of Certain Representations and Obligations
   18




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VIII. Notices
  19




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IX. Binding Effect of Agreement
  X. Governing Law
  XI. Power of Attorney
  XII. Expenses
 ®
 XIII. Counterparts
  XIV. Additional Definition
  20




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XV. Officials Not to Benefit
  XVI. Miscellaneous
  XVII. No Fiduciary Duty
  21




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Very truly yours,TENNESSEE VALLEY AUTHORITYBy:
    
    /s/ John M. HoskinsName:
    
    John M. HoskinsTitle:
    
    Senior Vice President, Treasurer/Investor Relations




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A.G. EDWARDS & SONS, INC.
 By:
    
    /s/ Joyce OpinskyName: Joyce OpinskyTitle:   Vice President




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CITIGROUP GLOBAL MARKETS INC.
 By:
    
    /s/ Jack D. McSpadden, Jr.Name: Jack D. McSpadden, Jr.Title:   Managing Director




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EDWARD D. JONES & CO., L.P.
 By:
    
    /s/ David G. OttoName: David G. OttoTitle:   Principal, Government & Mortgage-backed Securities




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FIRST TENNESSEE BANK NATIONAL ASSOCIATION
 By:
    
    /s/ Joel RossName: Joel RossTitle:   SVP




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J.J.B. HILLIARD, W.L. LYONS, INC.
 By:
    
    /s/ Donald MerrifieldName: Donald MerrifieldTitle:   Senior Vice President




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LASALLE FINANCIAL SERVICES, INC.
 By:
    
    /s/ Melissa TothName: Melissa Toth
 
 -2-




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MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
 By:
    
    /s/ Brant MeleskiName: Brant MeleskiTitle:   Director




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MORGAN STANLEY & CO. INCORPORATED




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WACHOVIA SECURITIES, LLC
 By:
    
    /s/ George CurciName: George CurciTitle:   Senior Vice President
 rd




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EXHIBIT A
 DEALER AGENT PROGRAM
  1 year
    
    
    0.200
    %2 years
    
    
    0.400
    %3 years
    
    
    0.625
    %4 years
    
    
    1.000
    %5 years
    
    
    1.000
    %7 years
    
    
    1.250
    %10 years
    
    
    1.500
    %13 years
    
    
    2.000
    %15 years
    
    
    2.000
    %more than 15 years
    
    
    2.000
    %
 EXHIBIT A-1




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EXHIBIT B
  ®
   
    EXHIBIT B-1




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1
  Administrative Procedures for Bonds
  Maturities:
    
    Each Book-Entry Note will mature on a date (the Maturity Date) one year
to thirty years from the date of issuance by the Company of such Book-Entry
Note. Book-Entry Notes may be issued with any maturity selected by the
Company. Maturity when used with respect to any Book-Entry Note means
the date on which the outstanding principal amount of such Book-Entry
 
 1
    
    The original master note was executed and
authenticated by TVA as of April 12, 2001, a second master note was executed
and authenticated by TVA as of November 14, 2002, and a third master note was
executed and authenticated by TVA as of June 1, 2006. Upon repayment in full
of all amounts due on the electronotes® issued prior to the
date hereof and evidenced by the original master note or the second master
note, such master note will be cancelled and returned to the Company or
disposed of in accordance with the Paying Agents customary procedures.
All electronotes® hereinafter issued will be represented by
the third master note. Notwithstanding anything herein to the contrary, the
principal amount of electronotes® outstanding under the third
master note, together with the principal amounts then outstanding under the
original master note and the second master note, may not at any time exceed
$3,000,000,000. EXHIBIT B-2




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Note
becomes due and payable in full in accordance with its terms, whether at
its Maturity Date or by redemption, repayment or otherwise.Issuance:
    
    The Book-Entry Notes will be represented by a Master Note. Each Master
Note will be dated and issued as of the date of its countersignature by the
Paying Agent.Identification Numbers:
    
    The Company has received from the CUSIP Service Bureau (the CUSIP Service
Bureau) of Standard & Poors Corporation (Standard & Poors) one series
of CUSIP numbers consisting of approximately 900 CUSIP numbers for future
assignment to Book-Entry Notes. The Company will provide DTC and the
Paying Agent with a list of such CUSIP numbers. The Company will assign
CUSIP numbers as described below under Settlement Procedure B. DTC will
notify the CUSIP Service Bureau periodically of the CUSIP numbers that the
Company has assigned to Book-Entry Notes. The Company will reserve
additional CUSIP numbers when necessary for assignment to Book-Entry Notes
and will provide the Paying Agent and DTC with the list of additional CUSIP
numbers so obtained.Registration:
    
    Unless otherwise specified by DTC, each Master Note will be issued only in
fully registered form without coupons. Each Master Note will be registered
in the name of Cede & Co., as nominee for DTC, on the bond register
maintained under the Paying Agency Agreement by the Paying Agent. The
beneficial owner of a Book-Entry Note (or one or more indirect participants
in DTC designated by such owner) will designate one or more participants in
DTC (with respect to such Book-Entry Note, the Participants) to act as
agent or agents for such owner in connection with the book-entry system
maintained by DTC, and DTC will record in book-entry form, in accordance
with instructions provided by such Participants, a credit balance with
respect to such Book-Entry Note in the account of such Participants. The
ownership interest of such beneficial owner in such Book-Entry Note will be
recorded through the records of such Participants or through the separate
records of such Participants and one or more indirect participants in DTC.
So long as Cede & Co. is the registered owner of a Master Note, DTC will be
considered the sole owner and holder of the Book-Entry Notes represented by
the Master Note for all purposes under the Resolutions.Transfers:
    
    Transfers of interests in a Book-Entry Note will be accomplished by book
entries made by DTC and, in turn, by Participants (and in
 EXHIBIT B-3




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certain cases,
one or more indirect participants in DTC) acting on behalf of beneficial
transferors and transferees of such interests.Denominations:
    
    Book-Entry Notes will be issued in denominations of $1,000 or more (in
multiples of $1,000).Issue Price:
    
    Unless otherwise specified in an applicable Pricing Supplement or Permitted
Free Writing, each Book-Entry Note will be issued at the percentage of
principal amount specified in the Offering Circular relating to such
Book-Entry Note.Interest:
    
    Each Book-Entry Note will bear interest at a fixed rate, which may be zero
during all or any part of the term in the case of certain Book-Entry Notes
issued at a price representing a substantial discount from the principal
amount payable at Maturity. The rate of interest on any Book-Entry Note
may not exceed the Maximum Rate of Interest which on the date of the
Selling Agency Agreement is 9%. Interest on each Book-Entry Note will
accrue from the Issue Date of such Book-Entry Note for the first interest
period and from the most recent Interest Payment Date to which interest has
been paid for all subsequent interest periods. Except as set forth
hereafter, each payment of interest on a Book-Entry Note will include
interest accrued to but excluding, as the case may be, the Interest Payment
Date or the date of Maturity (other than a Maturity Date of a Book-Entry
Note occurring on the 31st day of a month in which case such payment of
interest will include interest accrued to but excluding the 30th day of
such month). Any payment of principal, premium, or interest required to be
made on a day that is not a Business Day (as defined below) may be made on
the next succeeding Business Day and no interest shall accrue as a result
of any such delayed payment.Each Book-Entry Note will bear interest from and including its Issue Date
at the rate per annum set forth in the applicable Pricing Supplement or
Permitted Free Writing until the principal amount thereof is paid, or made
available for payment, in full. Unless otherwise specified in the
applicable Pricing Supplement or Permitted Free Writing, interest on each
Book-Entry Note (other than a Zero-Coupon Bond) will be payable either
monthly, quarterly, semiannually, or annually on each Interest Payment Date
and at Maturity (or on the date of redemption or repayment if a Book-Entry
Note is repurchased by the Company prior to maturity pursuant to mandatory
or optional redemption provisions or the Survivors Option). Interest will
be payable to the person in whose name a Book-Entry Note is registered at
the close of
 EXHIBIT B-4




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business on the Regular Record Date next preceding each
Interest Payment Date; provided, however, that interest payable at Maturity
will be payable to the person to whom principal shall be payable. The
Regular Record Date with respect to any Interest Payment Date shall be the
date fifteen calendar days prior to such Interest Payment Date, whether or
not such date shall be a Business Day; provided, however, that interest
payable at Maturity will be payable to the person to whom principal shall
be payable.Any payment of principal, and premium, if any, or interest required to be
made on a Book-Entry Note on a day which is not a Business Day need not be
made on such day, but may be made on the next succeeding Business Day with
the same force and effect as if made on such day, and no additional
interest shall accrue as a result of such delayed payment. Unless
otherwise specified in the applicable Pricing Supplement or Permitted Free
Writing, any interest on the Book-Entry Notes will be computed on the basis
of a 360-day year of twelve 30-day months. The interest rates the Company
will agree to pay on newly issued Book-Entry Notes are subject to change
without notice by the Company from time to time, but no such change will
affect any Book-Entry Notes already issued or as to which an offer to
purchase has been accepted by the Company.The Interest Payment Dates for a Book-Entry Note that provides for monthly
interest payments shall be the fifteenth day of each calendar month,
commencing in the calendar month that next succeeds the month in which the
Book-Entry Note is issued. In the case of a Book-Entry Note that provides
for quarterly interest payments, the Interest Payment Dates shall be the
fifteenth day of each third month, commencing in the third succeeding
calendar month following the month in which the Book-Entry Note is issued.
In the case of a Book-Entry Note that provides for semiannual interest
payments, the Interest Payment dates shall be the fifteenth day of each
sixth month, commencing in the sixth succeeding calendar month following
the month in which the Book-Entry Note is issued. In the case of a
Book-Entry Note that provides for annual interest payments, the Interest
Payment Date shall be the fifteenth day of every twelfth month, commencing
in the twelfth succeeding calendar month following the month in which the
Book-Entry Note is issued.Each payment of interest on a Book-Entry Note shall include accrued
interest from and including the Issue Date or from and including the last
day in respect of which interest has been paid
 EXHIBIT B-5




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(or duly provided for), as
the case may be, to, but excluding, the Interest Payment Date or Maturity
Date, as the case may be.Calculation of Interest:
    
    Unless otherwise specified in the applicable Pricing Supplement or
Permitted Free Writing, interest on the Book-Entry Notes (including
interest for partial periods) will be calculated on the basis of a 360-day
year of twelve 30-day months.Business Day:
    
    Business Day means, unless otherwise specified in the applicable Pricing
Supplement or Permitted Free Writing, any day, other than a Saturday or
Sunday, that meets the following applicable requirement: such day is not a
day on which banking institutions are authorized or required by law or
executive order to be closed in the City of New York.Payments of Principal
and Interest:
    
    Promptly after each Regular Record Date, the Paying Agent will deliver to
the Company and DTC a written notice specifying by CUSIP number the amount
of interest, if any, to be paid on each Book-Entry Note on the following
Interest Payment Date (other than an Interest Payment Date coinciding with
a Maturity Date) and the total of such amounts. DTC will confirm the
amount payable on each Book-Entry Note on such Interest Payment Date by
reference to the daily bond reports published by Standard & Poors. On
such Interest Payment Date, the Company will pay to the Paying Agent, and
the Paying Agent in turn will pay to DTC, such total amount of interest due
(other than on the Maturity Date), at the times and in the manner set forth
below under Manner of Payment. If any Interest Payment Date for any
Book-Entry Note is not a Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no interest shall accrue on
such payment for the period from and after such Interest Payment Date.Payments on the 
Maturity Date:

    
    On or about the first Business Day of each month, the Paying Agent will
deliver to the Company and DTC a written list of principal, premium, if
any, and interest to be paid on any Book-Entry Note maturing or subject to
redemption (pursuant to a sinking fund or otherwise) or repayment
(Maturity) in the following month. The Paying Agent, the Company, and
DTC will confirm the amounts of such principal, premium, if any, and
interest payments with respect to such Book-Entry Note on or about the
fifth Business Day preceding the Maturity Date of such Book-Entry Note. On
the Maturity Date, the Company will pay to the Paying Agent, and the Paying
Agent in turn will pay to DTC, the principal amount of such Book-Entry
Note, together with interest and premium, if any, due on such Maturity
Date, at
 EXHIBIT B-6




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the times and in the manner set forth below under Manner of
Payment. If the Maturity Date of any Book-Entry Note is not a Business
Day, the payment due on such day shall be made on the next succeeding
Business Day and no interest shall accrue on such payment for the period
from and after such Maturity Date.Manner of Payment:
    
    The total amount of any principal, premium, if any, and interest due on
Book-Entry Notes on any Interest Payment Date or at Maturity shall be paid
by the Company to the Paying Agent in immediately available funds on such
date. The Company will make such payment on such Book-Entry Notes by
instructing the Paying Agent to withdraw funds from an account maintained
by the Company by wire transfer as agreed with the Paying Agent. The
Company will confirm such instructions in writing to the Paying Agent.
Prior to 11:00 a.m., New York City time, on the Maturity Date or as soon as
possible thereafter, the Paying Agent will make payment to DTC in
accordance with existing arrangements between DTC and the Paying Agent, in
funds available for immediate use by DTC, each payment of interest,
principal, and premium, if any, due on a Book-Entry Note on such date. On
each Interest Payment Date (other than on the Maturity Date) the Paying
Agent will pay DTC such interest payments in same-day funds in accordance
with existing arrangements between the Paying Agent and DTC. Thereafter,
on each such date, DTC will pay, in accordance with its SDFS operating
procedures then in effect, such amounts in funds available for immediate
use to the respective Participants with payments in amounts proportionate
to their respective holdings in principal amount of beneficial interest in
such Book-Entry Note as are recorded in the book-entry system maintained by
DTC. Neither the Company nor the Paying Agent shall have any direct
responsibility or liability for the payment by DTC of the principal of, or
premium, if any, or interest on, the Book-Entry Notes to such Participants.Withholding Taxes:
    
    The amount of any taxes required under applicable law to be withheld from
any interest payment on a Book-Entry Note will be determined and withheld
by the Participant, indirect participant in DTC, or other person
responsible for forwarding payments and materials directly to the
beneficial owner of such Book-Entry Note.Procedure for Rate
Setting and Posting:
    
    The Company and the Agents will discuss, from time to time, the aggregate
principal amounts of, the Maturities, the Issue Price and the interest
rates (which will not exceed the Maximum Rate of Interest) to be borne by
Book-Entry Notes that may be sold as a
 EXHIBIT B-7




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result of the solicitation of orders
by the Agents. If the Company decides to set interest rates borne by any
Book-Entry Notes in respect of which the Agents are to solicit orders (the
setting of such interest rates to be referred to herein as Posting and
the day on which such interest rates are set to be referred to herein as
the Posting Day), or if the Company decides to change interest rates
previously posted by it, it will promptly advise the Agents of the prices
and interest rates to be posted.The Company will assign a separate CUSIP number for each tranche of
Book-Entry Notes to be posted, and will so advise and notify the Paying
Agent and Purchasing Agent of said assignment by telephone and/or by
telecopier or other form of electronic transmission. The Purchasing Agent
will, in turn, include the assigned CUSIP number on all Posting notices
communicated to the Agents and Selling Group members.Offering of Book-Entry
Notes:
    
    In the event that there is a Posting, the Purchasing Agent will communicate
to each of the Agents and Selling Group members the aggregate principal
amount and Maturities of, along with the interest rates to be borne by,
each Book-Entry Note that is the subject of the Posting. Thereafter, the
Purchasing Agent, along with the other Agents and the Selling Group, will
solicit offers to purchase the Book-Entry Notes accordingly.Purchase of Book-Entry
Notes by the Purchasing
Agent:
    
    The Purchasing Agent will, no later than 4:00 p.m. (New York City time) on
the seventh day subsequent to the day on which such Posting occurs, or if
such seventh day is not a Business Day, on the preceding Business Day, or
on such other Business Day and time as shall be mutually agreed upon by the
Company and the Purchasing Agent (any such day, a Trade Day), (i)
complete, execute, and deliver to the Company a Terms Agreement that sets
forth, among other things, the amount of each Book-Entry Note that the
Purchasing Agent is offering to purchase or (ii) inform the Company that
none of the Book-Entry Notes will be purchased by the Purchasing Agent.Acceptance and
Rejection of Orders:
    
    Unless otherwise agreed by the Company and the Purchasing Agent, the
Company has the sole right to accept orders to purchase Book-Entry Notes
and may reject any such order in whole or in part; provided that the
Company may not accept orders to purchase Book-Entry Notes which bear
interest at a rate above the Maximum Rate of Interest. Unless otherwise
instructed by the Company, the Purchasing Agent will promptly advise the
Company by telephone of all offers to purchase Book-Entry Notes received by
it, other than those rejected by it in whole or in
 EXHIBIT B-8




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part in the reasonable
exercise of its discretion. No order for less than $1,000 principal amount
of Book-Entry Notes will be accepted.


Upon receipt of a completed and executed Terms Agreement from the
Purchasing Agent (substantially in the form attached to the Selling Agent
Agreement as Exhibit C), the Company will (i) promptly execute and return
such Terms Agreement to the Purchasing Agent or (ii) inform the Purchasing
Agent that its offer to purchase the Book-Entry Notes has been rejected, in
whole or in part. The Purchasing Agent will thereafter promptly inform the
other Agents and participating Selling Group members of the action taken by
the Company.Preparation of Pricing
Supplement or Permitted
Free Writing:
    
    The Company will provide a Pricing Supplement (substantially in the form
attached to the Selling Agent Agreement as Exhibit D) or a Permitted Free
Writing (in the form to be attached to the Terms Agreement), in either case
reflecting the terms of such Book-Entry Note, and will supply a copy
thereof (or additional copies if requested) to the Purchasing Agent, on or
as soon as reasonably practicable after the Posting Day but in no event
later than 12:00 p.m. on the Trade Day, and one copy to the Paying Agent.
The Purchasing Agent will cause an Offering Circular (together with the
Pricing Supplement or Permitted Free Writing) to be delivered to each of
the other Agents and Selling Group members that purchased such Book-Entry
Notes, and each of these, in turn, will, pursuant to the terms of the
Selling Agent Agreement and the Master Selected Dealer Agreement, cause to
be delivered a copy of the Offering Circular (together with the Pricing
Supplement or Permitted Free Writing) to each purchaser of Book-Entry Notes
from such Agent or Selling Group member. The Agents and the Selling Group
members will not deliver a confirmation for sale to any prospective
purchaser until it has delivered the Offering Circular (together with the
Pricing Supplement or Permitted Free Writing) as required by the
immediately preceding sentence.In each instance that a Pricing Supplement or Permitted Free Writing is
prepared, the Agents or Selling Group members will affix the Pricing
Supplement or Permitted Free Writing to the Offering Circular prior to
their use if the Pricing Supplement or Permitted Free Writing is not
already affixed thereto.Delivery of
Confirmation and
Offering Circular:
    
    Subject to Suspension of Solicitation; Amendment or Supplement below, the
Agents and Selling Group members will deliver an Offering Circular
(together with the Pricing
 EXHIBIT B-9




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Supplement or Permitted Free Writing) as herein
described with respect to each Book-Entry Note sold by it.For each Book-Entry Note sold by an Agent or Selling Group member, the
Agent or Selling Group member who sold such Book-Entry Note will issue a
confirmation to the purchaser, setting forth the terms of such Book-Entry
Note and other applicable details described above and delivery and payment
instructions. In addition, the Agent or Selling Group member who sold such
Book-Entry Note will deliver to such purchaser the Offering Circular
(together with the Pricing Supplement or Permitted Free Writing) in
relation to such Book-Entry Note as soon as reasonably practicable after
the Company provides a copy of such Offering Circular (together with the
Pricing Supplement or Permitted Free Writing) to the Purchasing Agent but
in no event later than the delivery of the confirmation of sale.Settlement:
    
    The receipt of immediately available funds by the Company in payment for
Book-Entry Notes and the issuance of the Book-Entry Notes shall constitute
Settlement with respect to such Book-Entry Notes. All orders accepted by
the Company will be settled within one to three Business Days pursuant to
the timetable for Settlement set forth below, unless the Company and the
Purchasing Agent agree to Settlement on a later date, and shall be
specified upon acceptance of such offer; provided, however, that in all
cases the Company will notify the Paying Agent on the date issuance
instructions are given.Settlement Procedures:
    
    In the event of a purchase of a Book-Entry Note by the Purchasing Agent, as
principal, appropriate Settlement details, if different from those set
forth below, will be set forth in the applicable Terms Agreement to be
entered into between the Purchasing Agent and the Company pursuant to the
Selling Agent Agreement. Settlement Procedures with regard to each
Book-Entry Note purchased by the Purchasing Agent, as principal, shall be
as follows:
 A.
    
    The Purchasing Agent will communicate the following details of the terms
of the offer with respect to each Book-Entry Note to be issued (the Bond
Sale Information) to the Company by telephone confirmed in writing or by
facsimile transmission or other acceptable written means:
 1.
    
    Principal amount of the offer;2.
    
    Interest Rate;
 EXHIBIT B-10




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3.
    
    Interest Payment Dates;4.
    
    Settlement Date;5.
    
    Maturity Date;6.
    
    Purchase Price;7.
    
    Purchasing Agents commission determined pursuant to Section IV(a) of
the Selling Agent Agreement;8.
    
    Net proceeds to the Company;9.
    
    Trade Date;10.
    
    If a Book-Entry Note is redeemable by the Company, such of the
following as are applicable:
 (i)
    
    The date on and after which such Book-Entry Note may be redeemed (the
Redemption Commencement Date),(ii)
    
    Initial redemption price (% of par), and(iii)
    
    Amount (% of par) that the initial redemption price shall decline
(but not below par) on each anniversary of the Redemption Commencement
Date;
 11.
    
    Whether the Book-Entry Note has the Survivors Option and the terms of
any other repayment provision;12.
    
    If a discount bond, the total amount of original issue discount, the
yield to maturity, and the initial accrual period of original issue
discount;13.
    
    DTC Participant Number of the institution through which the customer
will hold the beneficial interest in the Global Security.
 B.
    
    The Company will confirm the previously assigned CUSIP number to the
Book-Entry Note and then advise the Paying Agent and the Purchasing Agent
by telephone (confirmed in writing at any time on the same date) or by
telecopier or other form of electronic transmission of the information
received in accordance with Settlement
 EXHIBIT B-11




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Procedure A above and the assigned
CUSIP number. Each such communication by the Company will be deemed to
constitute a representation and warranty by the Company to the Paying Agent
and the Agents that (i) such Book-Entry Note is then, and at the time of
issuance and sale thereof will be, duly authorized for issuance and sale by
the Company; (ii) such Book-Entry Note, and the Master Note representing
such Book-Entry Note, will conform with the terms of the Resolutions; and
(iii) upon delivery of the Book-Entry Note, the aggregate principal amount
of all Bonds issued under the Resolutions will not exceed the aggregate
principal amount of Bonds authorized for issuance at such time by the
Company.C.
    
    The Paying Agent will communicate to DTC and the Purchasing Agent
through DTCs Participant Terminal System a pending deposit message
specifying the following Settlement information:
 1.
    
    The information received in accordance with Settlement Procedure A.2.
    
    The numbers of the participant accounts maintained by DTC on behalf of
the Paying Agent and the Purchasing Agent.3.
    
    The initial Interest Payment Date for such Book-Entry Note and, if then
calculated, the amount of interest payable on such Initial Interest Payment
Date (which amount shall have been confirmed by the Paying Agent).4.
    
    The CUSIP number of such Book-Entry Note.5.
    
    The frequency of interest.
 D.
    
    DTC will credit such Book-Entry Note to the participant account of the
Paying Agent maintained by DTC.E.
    
    The Paying Agent will enter an SDFS deliver order through DTCs
Participant Terminal System instructing DTC to (i) debit such Book-Entry
Note to the Paying Agents participant account and credit such Book-Entry
Note to the participant account of the Purchasing Agent maintained by DTC
and (ii) debit the settlement account of the Purchasing Agent and credit
the settlement account of the Paying Agent maintained by DTC, in an amount
 EXHIBIT B-12




---



##### 



equal to the price of such Book-Entry Note less the Purchasing Agents
commission. The entry of such a deliver order shall be deemed to
constitute a representation and warranty by the Paying Agent to DTC that
(a) the Master Note representing such Book-Entry Note has been issued and
authenticated, and (b) the Paying Agent is holding the Master Note
representing such Book-Entry Note pursuant to the Certificate Agreement.F.
    
    The Purchasing Agent will enter an SDFS deliver order through DTCs
Participant Terminal System instructing DTC to (i) debit such Book-Entry
Note to the Purchasing Agents participant account and credit such
Book-Entry Note to the participant accounts of the Participants to whom
such Book-Entry Note is to be credited maintained by DTC and (ii) debit the
settlement accounts of such Participants and credit the settlement account
of the Purchasing Agent maintained by DTC, in an amount equal to the price
of the Book-Entry Note so credited to their accounts.G.
    
    Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures E and F will be settled in accordance with SDFS
operating procedures in effect on the Settlement Date.H.
    
    The Paying Agent, upon confirming receipt of such funds, will credit to
an account of the Company funds available for immediate use in an amount
equal to the amount credited to the Paying Agents DTC participant account
in accordance with Settlement Procedure E.I.
    
    The Purchasing Agent will confirm the purchase of each Book-Entry Note
to the purchaser thereof either by transmitting to the Participant to whose
account such Book-Entry Note has been credited a confirmation order through
DTCs Participant Terminal System or by mailing a written confirmation to
such purchaser. In all cases, the Offering Circular (together with the
Pricing Supplement or Permitted Free Writing) must be delivered as soon as
reasonably practicable after the Company provides a copy of such Offering
Circular (together with the Pricing Supplement or Permitted Free Writing)
to the Purchasing Agent but in no event later than the delivery of such
confirmation.
 EXHIBIT B-13




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J.
    
    Upon request, the Paying Agent will as soon as practicable send to the
Company a statement setting forth the principal amount of Book-Entry Notes
outstanding as of the date of such request under the Resolutions and
setting forth the CUSIP number(s) assigned to, and a brief description of,
any orders of which the Company has advised the Paying Agent but which have
not yet been settled.
 Settlement Procedures
    
    For Book-Entry Notes solicited by the Purchasing Agent or Agent and
accepted by the Company, Settlement Procedures A through J shall be
completed as soon as possible but not later than the respective times (New
York City time) set forth below:Timetable:
    
    Settlement Procedure
    
    TimeA
    
    4:00 p.m. on the Trade Day.B
    
    5:00 p.m. on the Trade Day.C
    
    2:00 p.m. on the Business Day
before the Settlement Date.D
    
    11:00 a.m. on the Settlement Date.E-F
    
    2:00 p.m. on the Settlement Date.G
    
    2:45 p.m. on the Settlement Date.H
    
    3:00 p.m. on the Settlement Date.I
    
    5:00 p.m. on the Settlement Date.J
    
    At the request of the Company.In the event of a purchase of Book-Entry Notes by the Purchasing Agent, as
principal, appropriate Settlement details, if different from those set
forth above, will be set forth in the applicable Terms Agreement to be
entered into between the Purchasing Agent and the Company pursuant to the
Selling Agent Agreement.NOTE: The Offering Circular (together with the Pricing Supplement or
Permitted Free Writing) must be delivered as soon as reasonably practicable
after the Company provides a copy of such Offering Circular (together with
the Pricing Supplement or Permitted Free Writing) to the Purchasing Agent
but in no event later than the delivery of the written confirmation given
to the customer (Settlement Procedure I). Settlement Procedure G is
subject to extension in accordance with any extension of Fedwire closing
deadlines and in the other events specified in the SDFS operating
procedures in effect on the Settlement Date.If Settlement of a Book-Entry Note is rescheduled or cancelled,
 EXHIBIT B-14




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the Paying
Agent will deliver to DTC, through DTCs Participant Terminal System, a
cancellation message to such effect by no later than 2:00 p.m., New York
City time, on the Business Day immediately preceding the scheduled
Settlement Date.Failure to Settle:
    
    If the Paying Agent fails to enter an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement Procedure E, the Paying Agent may
deliver to DTC, through DTCs Participant Terminal System, as soon as
practicable a withdrawal message instructing DTC to debit such Book-Entry
Note to the participant account of the Paying Agent maintained at DTC. DTC
will process the withdrawal message; provided, that, such participant
account contains Book-Entry Notes having the same terms and having a
principal amount that is at least equal to the principal amount of such
Book-Entry Notes to be debited. If withdrawal messages are processed with
respect to all the Book-Entry Notes identified by a single CUSIP number,
the CUSIP number assigned to such Book-Entry Notes shall, in accordance
with CUSIP Service Bureau procedures, be cancelled and not immediately
reassigned.If the purchase price for any Book-Entry Note is not timely paid to the
Participants with respect to such Book-Entry Note by the beneficial
purchaser thereof (or a person, including an indirect participant in DTC,
acting on behalf of such purchaser), such Participants may enter a SDFS
deliver order through DTCs participant Terminal System reversing the
orders entered pursuant to Settlement Procedure F.Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Note, DTC may take any actions in accordance with its SDFS
operating procedures then in effect.Procedure for Rate 
Changes:
    
    Each time a decision has been reached to change rates, the Company will
promptly advise the Agents of the new rates, who will forthwith suspend
solicitation of purchases of Book-Entry Notes at the prior rates. The
Agents may telephone the Company with recommendations as to the changed
interest rates.Suspension of
Solicitation; Amendment
or Supplement:
    
    Subject to the Companys representations, warranties, and covenants
contained in the Selling Agent Agreement, the Company may instruct the
Agents to suspend at any time for any period of time or permanently, the
solicitation of orders to purchase Book-Entry Notes. Upon receipt of such
instructions (which may be given orally), each Agent will forthwith suspend
solicitation until such time as the Company has advised it that
 EXHIBIT B-15




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solicitation of offers to purchase may be resumed.In the event that at the time the Company suspends solicitation of offers
to purchase there shall be any orders outstanding for settlement, the
Company will promptly advise the Agents and the Paying Agent whether such
orders may be settled and whether copies of the Offering Circular (together
with the Pricing Supplement or Permitted Free Writing) as in effect at the
time of the suspension may be delivered in connection with the settlement
of such orders. The Company will have the sole responsibility for such
decision and for any arrangements which may be made in the event that the
Company determines that such orders may not be settled or that copies of
such Offering Circular (together with the Pricing Supplement or Permitted
Free Writing) may not be so delivered.If the Company decides to amend or supplement the Offering Circular (or any
Pricing Supplement or Permitted Free Writing), it will promptly advise the
Agents and furnish the Agents and the Paying Agent with the proposed
amendment or supplement and with such certificates and opinions as are
required, all to the extent required by and in accordance with the terms of
the Selling Agent Agreement. The Company will provide the Agents and the
Paying Agent with copies of any such supplement.Paying Agent Not to
Risk Funds:
    
    Nothing herein shall be deemed to require the Paying Agent to risk or
expend its own funds in connection with any payment to the Company, or the
Agents or the purchasers, it being understood by all parties that payments
made by the Paying Agent to either the Company or the Agents shall be made
only to the extent that funds are provided to the Paying Agent for such
purpose.Advertising Costs:
    
    The Company shall have the sole right to approve the form and substance of
any advertising an Agent may initiate in connection with such Agents
solicitation to purchase the Book-Entry Notes. The expense of such
advertising will be solely the responsibility of such Agent, unless
otherwise agreed to by the Company.
 EXHIBIT B-16




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EXHIBIT C
 ®
 
 
  $
  CUSIP Number:Interest Rate:
    
    

      
    %Maturity Date:Price to Public:Agents Concession:
    
    
      

    %Settlement Date, Time, and Place:Survivors Option:Interest Payment Dates:Optional Redemption, if any:Initial Redemption Date:Redemption Price:
  


 

Initially % of Principal Amount and
declining % of the Principal
Amount on each anniversary of the
Initial Redemption Date until the
Redemption Price is 100% of the
Principal Amount.
 EXHIBIT C-1




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LASALLE FINANCIAL SERVICES, INC.By:Name:Title:
  TENNESSEE VALLEY AUTHORITY
 By:Name:Title:
 EXHIBIT C-2




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EXHIBIT D
  Tennessee Valley Authorityelectronotes ®
 Tennessee Valley Authority Power Bonds
With Maturities of 12 Months or More from Date of Issue
 Pricing Supplement No.
    
    
    
    
    
    
    
    Trade Date:To Offering Circular Supplement dated, 200_

    
    
    
    
    
    
    Issue Date:and Offering Circular dated June 1, 2006Stated
    
    
    
    Maturity
    
    
    
    Price to
    
    
    
    Discounts &
    
    
    
    
    
    
    
    
    
    
    
    
    
    Survivors
    
    
    
    
    
    
    
    
    
    
    
    
    
    ProceedsCUSIP
    
    
    Interest Rate1
    
    
    
    Date
    
    
    
    Public2
    
    
    
    Commissions
    
    
    
    Interest Payment
    
    
    
    Option
    
    
    
    
    
    
    
    
    Subject to Redemption or Repayment
    
    
    
    TVAFirstFrequency
    
    
    
    Payment
    
    
    
    
    
    
    
    
    Yes/No
    
    
    
    Date and terms of redemption or repaymentOriginal Issue Discount Note:
    
    
    Total Amount of OID:Yes
    
    
    No
 
 1
    
    The interest rates on the TVA electronotes® may be changed by TVA from time to time, but any such change will not affect the interest rate on any TVA electronotes ® offered prior to the effective date of the change.2
    
    Expressed as a percentage of aggregate principal amount. Actual Price to Public may be less and will be determined by prevailing market prices at the time of purchase as set forth in the confirmation sheet.




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EXHIBIT E
 Form of Master Selected Dealer Agreement
 Name of Broker-DealerAddress:
   Applicability of this Agreement Securities Securities Act LFS Selected Dealers Offering Underwriters
 Conditions of Offering; Acceptance and Purchases




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##### 



Written Communication
 Representations, Warranties and Agreements.
 Registered Offerings Registered Offering Preliminary Prospectus Prospectus free writing prospectus Permitted Free Writing Prospectus Time of Sale Information




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##### 



Exchange Act Commission
 Offerings Pursuant to Offering Circular Exempted Securities Offering
 ) Offer and Sale to the Public Public Offering Price Concession Reallowance




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NASD
 Over-allotment; Stabilization; Unsold Allotments
 NASD Bank




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##### 



Relationship among Underwriters and Selected Dealers
 Blue Sky Laws.
 Compliance with Law.




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##### 



Registration of the Securities
 Electronic Media
 Structured Products.




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##### 



New Products
 U. S. Patriot Act/Office of Foreign Asset Control (OFAC)
 Cease and Desist Proceedings
 Indemnification Losses




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Termination, Supplements and Amendments
 Successors and Assigns
 Governing Law
 Headings and References




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##### 



Very truly yours,LaSalle Financial Services, Inc.By:
    
    /s/ Melissa TothName: Melissa TothTitle: First Vice President
 CONFIRMED: , 20__(NAME OF BROKER-DEALER)By:Name:Title: