Leases (Text Block)

12 Months Ended

Sep. 30, 2025

Leases [Abstract]

Lessee, Operating Leases

. Leases

    The following table provides information regarding the presentation of leases on the Consolidated Balance Sheets:

Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions)
		2025		2024
Assets
Operating	Operating lease assets, net of amortization	$	113	$	149
Finance	Finance leases	663		729
Total lease assets		$	776	$	878
Liabilities
Current
Operating	Accounts payable and accrued liabilities	$	46	$	63
Finance	Accounts payable and accrued liabilities	86		80
Non-current
Operating	Other long-term liabilities	63		88
Finance	Finance lease liabilities	640		700
Total lease liabilities		$	835	$	931

    TVA's leases consist primarily of railcars, equipment, real estate/land, power generating facilities, and gas pipelines. TVA's leases have various terms and expiration dates remaining from less than one year to 21 years. The components of lease costs were as follows:

Lease Costs For the years ended September 30 (in millions)
	2025		2024		2023
Operating lease costs(1)	$	73	$	77	$	69
Variable lease costs(1)(5)	337		258		134
Short-term lease costs(1)	15		10		18
Finance lease costs
Amortization of lease assets(2)	91		79		57
Interest on lease liabilities(3)(4)	46		37		43
Total finance lease costs	137		116		100
Total lease costs	$	562	$	461	$	321

Notes

(1) Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations.

(2) Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations.

(3) Expense is included in Interest expense on the Consolidated Statements of Operations.

(4) Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense.

(5) Variable lease costs include costs related to variable payments that are based on energy production levels, which are allocated to expense based on the determination of lease and non-lease components associated with the underlying agreements.

    TVA's variable lease costs are primarily related to energy payments that are based on energy production levels. Payments under those agreements are solely based on the actual output over the lease term. Certain TVA lease agreements contain renewal options. Those renewal options that are reasonably certain to be exercised are included in the lease measurements.

The following table contains additional information with respect to cash and non-cash activities related to leases:

Amounts Recognized on TVA's Consolidated Statements of Cash Flows For the years ended September 30 (in millions)
	2025		2024		2023
Operating cash flows for operating leases	$	72	$	78	$	77
Operating cash flows for finance leases	46		37		43
Financing cash flows for finance leases	82		76		56
Lease assets obtained in exchange for lease obligations (non-cash)
Operating leases	$	14	$	115	$	84
Finance leases	28		230		3

TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement.  This resulted in an interest rate that was higher than TVA's incremental borrowing rate. The weighted average remaining lease terms in years and the weighted average discount rate for TVA's operating and finance leases were as follows:

Weighted Averages At September 30
	2025	2024
Weighted average remaining lease terms
Operating leases	3 years	4 years
Finance leases(1)	8 years	9 years
Weighted average discount rate(2)
Operating leases	4.2%	4.3%
Finance leases	17.0%	17.6%

Note

(1) One of TVA's finance leases includes an option period to extend, which TVA is reasonably certain to exercise.

(2) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. If the rate used by the lessor is not readily determinable, TVA uses its incremental borrowing rate as permitted by accounting guidance. The incremental borrowing rate is influenced by TVA's credit rating and lease term and as such may differ for individual leases, embedded leases, or portfolios of leased assets.

    The following table presents maturities of lease liabilities and a reconciliation of the undiscounted cash flows to lease liabilities at September 30, 2025:

Future Minimum Lease Payments Minimum payments outstanding at September 30, 2025 (in millions)
Operating leases
2026	$	50
2027	35
2028	19
2029	4
2030	2
Thereafter	6
Minimum annual payments	116
Less: present value discount	(7)
Operating present value of net minimum lease payments	$	109
Finance leases
2026	$	144
2027	142
2028	137
2029	134
2030	133
Thereafter	340
Minimum annual payments	1,030
Less: amount representing interest	(304)
Finance present value of net minimum lease payments	$	726

TVA has entered into three PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems. The systems are considered a lease component in these agreements. These PPAs have terms of 15 - 20 years and are expected to commence between January 2026 and December 2028. Total capacity payments related to these batteries over the term of these PPAs are expected to total $862 million.

Lessee, Finance Leases

. Leases

    The following table provides information regarding the presentation of leases on the Consolidated Balance Sheets:

Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions)
		2025		2024
Assets
Operating	Operating lease assets, net of amortization	$	113	$	149
Finance	Finance leases	663		729
Total lease assets		$	776	$	878
Liabilities
Current
Operating	Accounts payable and accrued liabilities	$	46	$	63
Finance	Accounts payable and accrued liabilities	86		80
Non-current
Operating	Other long-term liabilities	63		88
Finance	Finance lease liabilities	640		700
Total lease liabilities		$	835	$	931

    TVA's leases consist primarily of railcars, equipment, real estate/land, power generating facilities, and gas pipelines. TVA's leases have various terms and expiration dates remaining from less than one year to 21 years. The components of lease costs were as follows:

Lease Costs For the years ended September 30 (in millions)
	2025		2024		2023
Operating lease costs(1)	$	73	$	77	$	69
Variable lease costs(1)(5)	337		258		134
Short-term lease costs(1)	15		10		18
Finance lease costs
Amortization of lease assets(2)	91		79		57
Interest on lease liabilities(3)(4)	46		37		43
Total finance lease costs	137		116		100
Total lease costs	$	562	$	461	$	321

Notes

(1) Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations.

(2) Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations.

(3) Expense is included in Interest expense on the Consolidated Statements of Operations.

(4) Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense.

(5) Variable lease costs include costs related to variable payments that are based on energy production levels, which are allocated to expense based on the determination of lease and non-lease components associated with the underlying agreements.

    TVA's variable lease costs are primarily related to energy payments that are based on energy production levels. Payments under those agreements are solely based on the actual output over the lease term. Certain TVA lease agreements contain renewal options. Those renewal options that are reasonably certain to be exercised are included in the lease measurements.

The following table contains additional information with respect to cash and non-cash activities related to leases:

Amounts Recognized on TVA's Consolidated Statements of Cash Flows For the years ended September 30 (in millions)
	2025		2024		2023
Operating cash flows for operating leases	$	72	$	78	$	77
Operating cash flows for finance leases	46		37		43
Financing cash flows for finance leases	82		76		56
Lease assets obtained in exchange for lease obligations (non-cash)
Operating leases	$	14	$	115	$	84
Finance leases	28		230		3

TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement.  This resulted in an interest rate that was higher than TVA's incremental borrowing rate. The weighted average remaining lease terms in years and the weighted average discount rate for TVA's operating and finance leases were as follows:

Weighted Averages At September 30
	2025	2024
Weighted average remaining lease terms
Operating leases	3 years	4 years
Finance leases(1)	8 years	9 years
Weighted average discount rate(2)
Operating leases	4.2%	4.3%
Finance leases	17.0%	17.6%

Note

(1) One of TVA's finance leases includes an option period to extend, which TVA is reasonably certain to exercise.

(2) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. If the rate used by the lessor is not readily determinable, TVA uses its incremental borrowing rate as permitted by accounting guidance. The incremental borrowing rate is influenced by TVA's credit rating and lease term and as such may differ for individual leases, embedded leases, or portfolios of leased assets.

    The following table presents maturities of lease liabilities and a reconciliation of the undiscounted cash flows to lease liabilities at September 30, 2025:

Future Minimum Lease Payments Minimum payments outstanding at September 30, 2025 (in millions)
Operating leases
2026	$	50
2027	35
2028	19
2029	4
2030	2
Thereafter	6
Minimum annual payments	116
Less: present value discount	(7)
Operating present value of net minimum lease payments	$	109
Finance leases
2026	$	144
2027	142
2028	137
2029	134
2030	133
Thereafter	340
Minimum annual payments	1,030
Less: amount representing interest	(304)
Finance present value of net minimum lease payments	$	726

TVA has entered into three PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems. The systems are considered a lease component in these agreements. These PPAs have terms of 15 - 20 years and are expected to commence between January 2026 and December 2028. Total capacity payments related to these batteries over the term of these PPAs are expected to total $862 million.