-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 SlvhFMr+pefbTrEw9jYQ9zwqR5f78sBZ1WsEEw9xZByMUkpF3FU53qhTqrfRKHaB
 ZPBfBn1KYg1qwx1k7/n7ew==

<SEC-DOCUMENT>0000950144-07-003901.txt : 20070824
<SEC-HEADER>0000950144-07-003901.hdr.sgml : 20070824
<ACCEPTANCE-DATETIME>20070427153347
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950144-07-003901
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20070427

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Tennessee Valley Authority
		CENTRAL INDEX KEY:			0001376986
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC SERVICES [4911]
		IRS NUMBER:				620474417
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		400 WEST SUMMIT HILL DRIVE
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37902
		BUSINESS PHONE:		865-632-2101

	MAIL ADDRESS:	
		STREET 1:		400 WEST SUMMIT HILL DRIVE
		CITY:			KNOXVILLE
		STATE:			TN
		ZIP:			37902
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>TVA - CORRESPONDENCE TO THE SEC</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">April&nbsp;27, 2007
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Assistant Director<BR>
Securities and Exchange Commission<BR>
100 F Street N.E.<BR>
Washington, DC 20549

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="left" valign="top">Re:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Tennessee Valley Authority</B></DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Form&nbsp;10-K for the Fiscal Year Ended September&nbsp;30, 2006</B><BR></DIV></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>File No.&nbsp;0-052313</B></DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Mr.&nbsp;Owings:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This letter sets forth the responses of the Tennessee Valley Authority (TVA)&nbsp;to the comments set
forth in the Staff&#146;s letter dated March&nbsp;12, 2007, in connection with the Form 10-K for the fiscal
year ended September&nbsp;30, 2006, filed by TVA with the Securities and Exchange Commission. For the
ease of reference, we have set forth each comment in the Staff&#146;s letter followed by TVA&#146;s response.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;1. Business, page 6</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Regulation, page 21</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Securities and Exchange Commission, page 21</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please disclose, here or in an appropriate section, that as an agency and
instrumentality of the United States, the offer and sale by you of your debt is exempt
from registration under the Securities Act, and that your securities are within the
definition of exempted securities and government securities under the Exchange Act. In
addition, discuss your exemption from the Trust Indenture Act of 1939 and that you are not
subject to the ownership reporting, proxy and tender offer rules. We note that on page
126 you have already</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 2<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">disclosed that you are exempted by section 37 from complying with section 10A(m)(2) of the
Exchange Act.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA intends to amend its annual report on Form 10-K for the year ended September&nbsp;30, 2006
(the Annual Report). In its amended Annual Report, TVA intends to revise Item&nbsp;1, Business
 &#151; <I>Regulation </I>&#151; <I>Securities and Exchange Commission </I>to read substantially as follows:</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Section&nbsp;37 was added to the Securities Exchange Act of 1934, as amended (the
Exchange Act), as part of the Consolidated Appropriations Act, 2005. Section&nbsp;37
requires TVA to file with the Securities and Exchange Commission beginning with the
Annual Report such periodic, current, and supplementary information, documents, and
reports as would be required pursuant to section 13 of the Exchange Act if TVA were
an issuer of a security registered pursuant to section 12 of the Exchange Act.
Since TVA is an agency and instrumentality of the United States, securities issued
or guaranteed by TVA are &#147;exempted securities&#148; under the Securities Act of 1933, as
amended (the Securities Act), and may be offered and sold without registration
under the Securities Act. In addition, securities issued or guaranteed by TVA are
&#147;exempted securities&#148; and &#147;government securities&#148; under the Exchange Act. TVA is
also exempt from sections 14(a)-(d) and 14(f)-(h) of the Exchange Act (which
address proxies) insofar as those sections relate to securities issued by TVA, and
transactions in TVA securities are exempt from rules governing tender offers under
Regulation&nbsp;14E of the Exchange Act. In addition, since TVA securities are exempted
securities under the Securities Act, TVA is exempt from the Trust Indenture Act of
1939 insofar as it relates to securities issued by TVA, and no independent trustee
is required for these securities.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Federal Energy Regulatory Commission, page 21</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please revise to discuss how FERC regulation affects your activities.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise Item&nbsp;1, Business &#151; <I>Regulation &#151;
Federal Energy Regulatory Commission </I>to read substantially as follows:</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA is not a &#147;public utility&#148; as defined in the Federal Power Act (FPA), which
generally includes investor-owned utilities. Therefore, TVA is not subject to the
full jurisdiction that the Federal Energy Regulatory Commission (FERC)&nbsp;exercises
over public utilities under the FPA. TVA</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 3<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">is, however, an &#147;electric utility&#148; as defined in the FPA and, thus, is directly
subject to certain aspects of FERC&#146;s jurisdiction.</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 either
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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under section 211 of the FPA, TVA may be ordered to transmit power at
wholesale provided that the order does not impair the reliability of the TVA
and 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&#146;s own use of its
transmission system. With the exception of wheeling power to Bristol,
Virginia, the anti-cherrypicking provision of the FPA precludes TVA from being
ordered to wheel another supplier&#146;s power to a customer if the power would be
consumed within TVA&#146;s defined service territory.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Sections&nbsp;221 and 222 of the FPA, applicable to the electric industry
generally, including TVA, prohibit (i)&nbsp;using manipulative or deceptive devices
or contrivances in connection with the purchase or sale of power or
transmission services subject to FERC&#146;s jurisdiction and (ii)&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Section&nbsp;206(e) of the FPA provides FERC with authority to order refunds of
excessive prices on short-term sales (transactions lasting 31&nbsp;days or less) by
TVA and others in market manipulation and price gouging situations if such
sales are under a FERC-approved tariff.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Section&nbsp;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.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 4<BR>
April&nbsp;27, 2007

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under sections 306 and 307 of the FPA, FERC may investigate electric
industry practices, including TVA&#146;s operations indicated above that are
subject to FERC&#146;s jurisdiction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under sections 316 and 316A of the FPA, FERC has authority to impose
criminal penalties and civil penalties of up to $1&nbsp;million a day for each
violation, respectively, on entities subject to the provisions of Part&nbsp;II of
the FPA, which includes the above provisions applicable to TVA.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Finally, while not required to do so, TVA has elected to implement various FERC
orders and regulations pertaining to public utilities on a voluntary basis to the
extent consistent with TVA&#146;s obligations under the TVA Act.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;1A. Risk Factors, page 26</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please discuss the following risks related to your debt:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please disclose that your debt is not backed by the full faith and credit of the
United States;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Describe the liquidity risk for any debt securities that are not publicly traded;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Describe any legal limitations for banks investing in your debt.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise the second paragraph of Item&nbsp;1A, Risk Factors to read substantially as
follows: &#147;For ease of reference, the risk factors are presented in four categories: strategic risks, operational risks, financial
risks, and risks related to TVA securities.&#148; In addition, TVA intends to add language substantially in the form of the following at
the end of Item&nbsp;1A, Risk Factors:</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>Risks Related to TVA Securities</B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Payment of principal and interest on TVA securities is not guaranteed by the United
States.</I></B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Although TVA is a corporate agency and instrumentality of the United States
government, TVA securities are not backed by the full faith and credit of the
United States. Principal and interest on TVA securities are payable solely from
TVA&#146;s net power proceeds. Net power proceeds are defined as the remainder of TVA&#146;s
gross power revenues after deducting</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 5<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">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.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The trading market for TVA securities might be limited.</I></B><BR>
All of TVA&#146;s Bonds are listed on the New York Stock Exchange except for TVA&#146;s
discount notes, which have maturities of less than one year, and the power bonds
issued under TVA&#146;s electronotes<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> program, which is TVA&#146;s medium-term
note program. In addition, some of TVA&#146;s Bonds are listed on foreign stock
exchanges. Although many of TVA&#146;s Bonds are listed on stock exchanges, there can
be no assurances that any market that will develop or continue to exist for any
Bonds. Additionally, no assurances can be made as to the ability of the holders of
Bonds to sell their Bonds or the price at which holders will be able to sell their
Bonds. Future trading prices of Bonds will depend on many factors, including
prevailing interest rates, the then-current ratings assigned to the Bonds, the
amount of Bonds outstanding, the time remaining until the maturity of the Bonds,
the redemption features of the Bonds, the market for similar securities, and the
level, direction, and volatility of interest rates generally.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">If a particular offering of Bonds is sold to or through underwriters, the
underwriters may attempt to make a market in the Bonds. The underwriters would not
be obligated to do so, however, and could terminate any market-making activity at
any time without notice.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In addition, legal limitations may affect the ability of banks and others to invest
in Bonds. For example, national banks may purchase TVA Bonds for their own
accounts in an amount not to exceed 10&nbsp;percent of unimpaired capital and surplus.
Also, TVA Bonds are &#147;obligations of a corporation which is an instrumentality of
the United States&#148; within the meaning of section 7701(a)(19)(C)(ii) of the Internal
Revenue Code for purposes of the 60&nbsp;percent of assets limitation applicable to U.S.
building and loan associations.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Operational Risks, page 28</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please discuss the risks of purchased power price volatility and provider unreliability.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to add language substantially similar to the
following as the third risk factor in Item&nbsp;1A, Risk Factors &#151; <I>Operational Risks:</I></DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 6<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Purchased power prices may be highly volatile, and providers of purchased power may
fail to perform under their contracts with TVA.</I></B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA acquires a portion of its electricity needs through purchased power
arrangements. The price for purchased power has been quite volatile in recent
years, so the price that TVA pays for purchased power may increase significantly in
the future. In addition, if one of TVA&#146;s purchased power suppliers fails to
perform under the terms of its contract with TVA, TVA might have to purchase
replacement power on the spot market, perhaps at a significantly higher price than
TVA was entitled to pay under the contract. In some circumstances, TVA may not be
able to recover this difference from the supplier. Moreover, if TVA is unable to
acquire replacement power on the spot market and does not have enough reserve
generation capacity available to offset the loss of power from the purchased power
supplier, TVA might be unable to satisfy its own obligations to deliver power. See
Item&nbsp;7, Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations &#151; <I>Business Overview </I>&#151; <I>Challenges During 2006 </I>&#151; <I>Increased Fuel and
Purchased Power Costs </I>and <I>Risk Management Activities </I>&#151; <I>Credit Risk </I>&#151; <I>Credit of
Other Counterparties.</I></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Selected Financial Data, page 38</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Net Cash Flow, page 39</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It appears that net cash flow is a non-GAAP liquidity measure that may be prohibited by Item
10(e) of Regulation&nbsp;S-K since it excludes items that required, or will require, cash
settlement. In particular, it appears the exclusion of energy prepayments may be prohibited
by this guidance. In this regard, please explain to us why you believe this measure is
permitted by Item&nbsp;10(e)(1)(ii)(A) of Regulation&nbsp;S-K and explain to us the significance of
adding back energy prepayments in arriving at this liquidity measure. We assume you are
adding back the line item &#147;Prepayment credits applied to revenue,&#148; which we understand to be
revenue in the current period that was received in cash in prior periods. If we are incorrect
in our understanding, please clarify it. Please be detailed in your explanation or remove the
measure. If we concur that this measure is permitted, please revise your disclosures as
follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rather than your current presentation, clearly reconcile net cash flow to cash from
operating activities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Present cash flows from operating, investing and financing activities alongside the
measure. See Question 12 of our &#147;Frequently Asked Questions Regarding the Use of
Non-GAAP Financial Measures,&#148; available on our website at <u>www.sec.gov</u>.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 7<BR>
April&nbsp;27, 2007

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclose the reasons why you believe net cash flow provides useful information to
investors regarding your financial condition and results of operations and any
additional purposes for which management uses this non-GAAP measure.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclose that the non-GAAP measure should not be considered as an alternative to
cash from operating activities, which is determined in accordance with GAAP, as a
measure of liquidity.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">The SEC is correct in its assessment that TVA was adding back the line item &#147;Prepayment
credits applied to revenue,&#148; which is noncash revenue in the current period that was
received in cash in prior periods. TVA intends to remove the net cash flow measure from
its amended Annual Report by deleting Item&nbsp;6, Selected Financial Data &#151; <I>Reconciliation
of Non-GAAP Items Required by Securities and Exchange Commission Rules </I>&#151; <I>Net Cash Flow</I>
from its amended Annual Report.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Total Financing Obligations, page 40</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please disclose the components of &#147;Financial Obligations&#148; such that a reader can recompute
the amount from the balance sheet. Additionally, please disclose the reasons why you believe
&#147;Total Financing Obligations&#148; provides useful information to investors regarding your
financial condition and results of operations and discuss any additional purposes for which
management uses this non-GAAP measure. See Items 10(e)(1)(i)(B) and 10(e)(1)(i)(C) of
Regulation&nbsp;S-K.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA included Total Financing Obligations as a non-GAAP measure to capture long-term
financial obligations of TVA that, like debt securities, require TVA to make periodic
payments or provide periodic credits. The Total Financing Obligations measure consisted of
Bonds, certain lease/leaseback commitments, and power prepayment obligations. TVA believes
that referring to the components of Total Financing Obligations individually will provide
the same benefit to investors as referring to the components as a single measure.
Accordingly, TVA intends to eliminate the Total Financing Obligation measure from its
amended Annual Report by making the following changes:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA intends to change &#147;total financing obligations&#148; to &#147;bonds, notes, and
other evidences of indebtedness, lease/leaseback commitments, and power prepayment
obligations&#148; in the sixth bullet in the third paragraph in the &#147;Forward-Looking
Information&#148; section.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 8<BR>
April&nbsp;27, 2007

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA intends to delete Item&nbsp;6, Selected Financial Data &#151; <I>Reconciliation of
Non-GAAP Items Required by Securities and Exchange Commission Rules </I>&#151; <I>Total Financing
Obligations </I>from its amended Annual Report.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA intends to change &#147;total financing obligations&#148; to &#147;Bonds and other
financial obligations&#148; in the second line of the first paragraph in Item&nbsp;7,
Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations
 &#151; <I>Business Overview </I>&#151; <I>Future Challenges.</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA intends to revise Item&nbsp;7, Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations &#151; <I>Business Overview </I>&#151; <I>Future
Challenges </I>&#151; <I>Total Financing Obligations </I>to read substantially as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><I>Bonds and Other Financial Obligations. </I>As of September&nbsp;30, 2006, TVA had
$22.9&nbsp;billion of Bonds outstanding. Payments on these obligations do not
change with the amount of power sold, and if competition increases, TVA&#146;s
obligations to make these payments could limit its ability to adjust to
market pressures. The amount of TVA&#146;s Bonds outstanding has been reduced
by more than $4&nbsp;billion since September&nbsp;30, 1996, when the end of year
balance of outstanding Bonds peaked. Since that time, however, TVA has
entered into energy prepayment transactions that resulted in $1.6&nbsp;billion
in prepayment obligations and certain lease/leaseback transactions that
resulted in $1.3&nbsp;billion in obligations. The amount of prepayment and
lease/leaseback obligations outstanding at September&nbsp;30, 2006, was $2.4
billion. While prudent management of Bonds and other financial
obligations will remain an important strategic consideration in the
future, increased capital commitments may make it difficult for TVA to
continue its trend of reducing these obligations.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;7. Management&#146;s Discussion and Analysis. . . , page 42</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please revise to discuss your portfolio of outstanding debt securities. We note that you
provide some of this information beginning on page 100. Please also describe any material
terms, including financial or restrictive covenants, rights and preferences. Please indicate
whether any bonds are publicly traded and identify the market. Please also include credit
rating information for each bond, if applicable.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 9<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise the first two paragraphs in Item&nbsp;7,
Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations &#151;
<I>Liquidity and Capital Resources </I>&#151; <I>Issuance of Debt </I>to read substantially as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><I>Issuance of Debt. </I>The TVA Act authorizes TVA to issue Bonds in an amount not to
exceed $30&nbsp;billion at any time. At September&nbsp;30, 2006, TVA had only two types of
Bonds outstanding: power bonds and discount notes. Power bonds have maturities of
between one and 50&nbsp;years, and discount notes have maturities of less than one year.
Power bonds and discount notes rank on parity and are payable solely out of net
power proceeds. Net power proceeds are defined as the remainder of TVA&#146;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.</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Power bonds and discount notes are both issued pursuant to section 15d of the TVA
Act and pursuant to the Basic Tennessee Valley Authority Power Bond Resolution
adopted by the TVA Board on October&nbsp;6, 1960, as amended on September&nbsp;28, 1976,
October&nbsp;17, 1989, and March&nbsp;25, 1992 (the Basic Resolution). The TVA Act and the
Basic Resolution each contain two bond tests: the rate test and the bondholder
protection test.</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the rate test, TVA must charge rates for power which will produce
gross revenues sufficient to provide funds for</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&#150;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>operation, maintenance, and administration of its power system;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&#150;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>payments to states and counties in lieu of taxes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&#150;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>debt service on outstanding Bonds;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&#150;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>payments to the U.S. Treasury as a repayment of and a
return on the Appropriation Investment; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&#150;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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 Appropriation
Investment, and other purposes connected with TVA&#146;s power business,</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 10<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 11%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">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.</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the bondholder protection test, TVA must, in successive five-year
periods, use an amount of net power proceeds at least equal to the sum of</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#150; the depreciation accruals and other charges
representing the amortization of capital expenditures and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#150; the net proceeds from any disposition of power
facilities for either</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="15%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#150; the reduction of its capital
obligations (including Bonds and the Appropriation Investment) or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="15%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#150; investment in power assets.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 12%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA must next meet the bondholder protection test for the five-year period
ending September&nbsp;30, 2010.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2006, all of TVA&#146;s Bonds were rated by at least one rating
agency except for two issues of power bonds and TVA&#146;s discount notes. TVA&#146;s rated
Bonds are currently rated &#147;Aaa&#148; by Moody&#146;s Investors Service and &#147;AAA&#148; by Standard
&#038; Poor&#146;s and Fitch Ratings, which are the highest ratings assigned by these
agencies. The ratings are not recommendations to buy, sell, or hold any TVA
securities and may be subject to revision or withdrawal at any time by the rating
agencies. Ratings are assigned independently, and each should be evaluated as such.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">All of TVA&#146;s Bonds are listed on the New York Stock Exchange except for TVA&#146;s
discount notes and the power bonds issued under TVA&#146;s electronotes<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
program. In addition, some of TVA&#146;s Bonds are listed on foreign stock exchanges.
See Item&nbsp;1A, Risk Factors &#151; <I>Risks Related to TVA Securities </I>for additional
information regarding the market for TVA&#146;s Bonds.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Commitments and Contingencies, page 50</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under &#147;payment to U.S. Treasury,&#148; please disclose the amounts to be paid in connection with the
appropriation investment and the treasury note separately.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 11<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise the &#147;Payments to the U.S. Treasury&#148;
portion of the Commitments and Contingencies table to read substantially as follows:</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26"><B>Commitments and Contingencies</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000"><B>Payments Due in the Year Ending September 30</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2011</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Thereafter</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments to the U.S. Treasury**</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Return of Appropriation Investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Return on Appropriation Investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">**TVA has access to financing arrangements with the U.S. Treasury whereby the U.S. Treasury is
authorized to accept from TVA a short-term note with the maturity of one year or less in an amount
not to exceed $150&nbsp;million. TVA may draw any portion of the authorized $150&nbsp;million during the
year. Interest is accrued daily at a rate determined by the United States Secretary of the
Treasury each month based on the average rate on outstanding marketable obligations of the United
States with maturities of one year or less. During 2006, the daily average outstanding balance was
$131&nbsp;million. TVA&#146;s practice is to repay on a quarterly basis the outstanding balance of the note
and related interest. Because of this practice, there was no outstanding balance on the note as of
September&nbsp;30, 2006. Accordingly, the Commitments and Contingencies table does not include any
outstanding payment obligations to the U.S. Treasury for this note at September&nbsp;30, 2006. See
Note 9 &#151; <I>Short-Term Debt.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Statements of Cash Flows, page 77</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As the significant length of the energy prepayment agreement suggests that the prepayment is
akin to a financing, please explain to us how you concluded it was appropriate to classify the
$1.5&nbsp;billion proceeds from energy prepayments as an operating activity as opposed to a
financing activity. Please be detailed in your response.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">On November&nbsp;19, 2003, TVA entered into an agreement with Memphis Light, Gas and Water
Division (MLGW)&nbsp;and the City of Memphis, Tennessee, under which MLGW made a prepayment to
TVA to cover a portion of its power costs over the next fifteen years (the Agreement). The
Agreement allowed TVA to extend the MLGW power contract for an additional 10&nbsp;years.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">The Agreement requires MLGW to purchase, and TVA to supply, the power to which the
prepayment applies over a 15-year period. The parties agreed that the</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 12<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">prepayment should be reflected as reserved energy to be supplied on a monthly basis over
the 15-year period at a discounted capacity cost to MLGW to be reflected by TVA&#146;s
application of a monthly credit on MLGW&#146;s power bill. TVA retains the right to raise
rates, so MLGW&#146;s fixed credit is applied against the power rate that is in effect at the
time power is delivered.<BR>
The prepayment arrangement is unlike debt because TVA is not obligated to make principal
and interest payments with respect to the prepayment; rather, TVA provides a credit for the
prepayment on MLGW&#146;s power bill. In addition, TVA&#146;s obligation to provide the credit on
MLGW&#146;s power bill is contingent upon MLGW&#146;s continuing to purchase the amount of power
specified under the Agreement. Moreover, the prepayment was not based on TVA&#146;s cost of
funds.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA considers the MLGW prepayment to be advanced sales to a customer based on the guidance
in paragraph 84(b) of Statement of Financial Accounting Concepts No.&nbsp;5, &#147;<I>Recognition and
Measurement in Financial Statements of Business Enterprises</I>,&#148; which states that &#147;&#091;i&#093;f sale
or cash receipt (or both) precedes production and delivery (for example, magazine
subscriptions), revenues may be recognized as earned by production and delivery.&#148; Since
cash received represents payments for energy not yet delivered, TVA recognizes revenue as
the energy is delivered.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA&#146;s cash flow statement classification for this prepayment arrangement is based on
Statement of Financial Accounting Standards (SFAS)&nbsp;No.&nbsp;95, &#147;<I>Statement of Cash Flows</I>.&#148;
Paragraph&nbsp;22a of SFAS No.&nbsp;95 indicates that operating cash flows include receipts from the
sales of goods or services and provides in pertinent part as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Cash inflows from operating activities are . . . &#091;c&#093;ash receipts from sales of
goods or services, including receipts from collection or sale of accounts and both
short- and long-term notes receivable from customers arising from those sales.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Similarly, paragraph 95 of SFAS No.&nbsp;95 indicates that cash receipts collected from
customers from the sale of inventory should be classified as operating cash flows and
provides in pertinent part as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">&#091;A&#093;ll cash collected from customers or paid to suppliers from the sale or purchase
of inventory should be classified as operating cash flows. That classification is
consistent with the notion that operating cash flows generally should include items
that are included in net income.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Since the prepayment is considered advanced sales of electricity to a customer under
Statement of Financial Accounting Concepts No.&nbsp;5 and cash receipts from such sales are
properly considered cash flows from operating activities under SFAS No.&nbsp;95, TVA believes
the cash flows related to the prepayment are properly classified as operating activities.</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 13<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Note 1. Summary of Significant Accounting Policies, page 79</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Reclassifications, page 80</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please explain to us your basis for netting customer prepayments against accounts
receivables. Ensure your response addresses whether you have a legal right of setoff as
described in FIN 39. Furthermore, explain to us why the classification of these prepayments
differs from the energy prepayments from Memphis Light, Gas, and Water Division, which are
classified as liabilities. In this regard you may want to explain to us the nature of the
various types of prepayments, including discounted energy units, to the extent there is more
than one.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">The prepayments that were netted against accounts receivable represent advances by
customers under TVA&#146;s Power Invoice Prepayment Program. Under this program, customers can
electronically transfer funds as often as once a week to be applied to their monthly TVA
power invoice. A prepayment account is maintained on TVA&#146;s ledgers for each customer that
participates in this program.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Funds advanced under this program are initially recorded by TVA as a current liability. At
the end of each month, the prepayment funds are reclassified as a credit against accounts
receivable up to the amount of the customer&#146;s outstanding balance due at that time. At the
time of each reclassification, TVA has delivered all of the electricity associated with the
prepayment funds that are being reclassified; accordingly, reclassifying the prepayment
funds from a liability to an asset is consistent with paragraph 25 of Statement of
Financial Accounting Concepts No.&nbsp;6, &#147;<I>Elements of Financial Statements</I>,&#148; which describes
assets as &#147;probable future economic benefits obtained or controlled by a particular entity
as a result of <I>past </I>transactions or events&#148; (emphasis added). The accounting treatment for
this reclassification is not affected by Financial Accounting Standards Board (FASB)
Interpretation No.&nbsp;39, &#147;<I>Offsetting of Amounts Related to Certain Contracts</I>&#148; (FIN No.&nbsp;39).
FIN No.&nbsp;39 discusses the circumstances under which amounts recognized for individual
contracts may be offset against amounts recognized for other contracts and reported as a
net amount in the statement of financial position. The reclassifications under the Power
Invoice Prepayment Program do not involve offsetting amounts under one contract against
amounts under another contract; rather, the reclassifications involve only reclassifying an
amount paid under a single contract from a liability to an asset after the electricity
associated with that amount has been delivered.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Prepayments under the Power Invoice Prepayment Program differ from prepayments under the
Discounted Energy Units (DEU)&nbsp;program and the</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 14<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">prepayment arrangement with MLGW primarily because of the timing of the prepayments in
relation to the delivery of the related power. Under the Power Invoice Prepayment Program,
the customers are prepaying for electricity taken during the current period. Under the DEU
program and the MLGW prepayment arrangement, however, customers have prepaid TVA for power
that they are to receive over the course of many years: 5, 10, 15, or 20&nbsp;years under the
DEU program and 15&nbsp;years under the MLGW prepayment arrangement.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA accounts for its obligations to deliver power under the DEU program and the MLGW
prepayment arrangement as liabilities. This accounting treatment is consistent with
paragraph 197 of Statement of Financial Accounting Concepts No.&nbsp;6, &#147;<I>Elements of Financial
Statements,&#148; </I>which provides in pertinent part as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">&#091;P&#093;repayments received for goods or services to be provided . . . qualify as
liabilities under the definition because an entity is required to provide goods or
services to those who have paid in advance.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Once TVA delivers the power under these arrangements, TVA reclassifies the liabilities as
revenues in accordance with paragraph 84(b) of Statement of Financial Accounting Concepts
No.&nbsp;5, &#147;<I>Recognition and Measurement in Financial Statements of Business Enterprises</I>,&#148; which
states that &#147;&#091;i&#093;f sale or cash receipt (or both) precedes production and delivery (for
example, magazine subscriptions), revenues may be recognized as earned by production and
delivery.&#148;</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Revision to Statements of Cash Flows, page 80</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As the payment of interest represents a cash outflow, we believe the cash interest underlying
the allowance for funds used during construction (AFUDC)&nbsp;represents an investing cash outflow.
In this regard, please explain to us the meaning of your disclosure that you report AFUDC as
a noncash component of investing activities. Otherwise, revise your disclosure accordingly.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise Note 1 &#151; <I>Revision to Statement of Cash
Flows </I>to read substantially as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">As of September&nbsp;30, 2006, TVA began reporting the allowance for funds used during
construction (AFUDC)&nbsp;related to construction expenditures as a component of cash
investing activities rather than as a component of operating activities. The
revised classification is consistent with guidance for the cash flow presentation
of capitalized interest. The previous method of reporting AFUDC was consistent
with the industry practice for the combined reporting of debt and equity AFUDC.
The result of this</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 15<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">reclassification is an increase in cash from operating activities of $116&nbsp;million
and $99&nbsp;million for 2005 and 2004, respectively, and an increase in funds used by
investing activities of $116&nbsp;million and $99&nbsp;million, respectively.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Accounts Receivable, page 80</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please explain to us why you treated the change in the methodology for estimating unbilled
revenue for electricity sales in fiscal 2003 as a cumulative effect of a change in accounting
principle while it appears you treated a similar change in this methodology in fiscal 2006 as
a change in accounting estimate.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">The fiscal 2006 change in the accounting for distributor unbilled revenue represented a
refinement of the basic unbilled revenue model for distributors used by TVA in the
estimation of its distributor unbilled revenues. The modifications to the unbilled revenue
model improved the quality and quantity of the estimates of unbilled revenue. The
improvement to the unbilled estimation process is obtained by applying estimated individual
customer billing rates to estimated individual customer power usage. The application of
estimated individual customer rates to estimated individual customer power usage contrasts
with TVA&#146;s prior method of applying one overall average customer rate to an estimate of
total power usage. The change in the estimation technique has resulted in more precise
unbilled revenue estimates.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In making the determination that the fiscal 2006 change in methodology was a change in
estimate, TVA followed the accounting guidance under Accounting Principles Board (APB)
Opinion No.&nbsp;20, &#147;<I>Accounting Changes,&#148; </I>as SFAS No.&nbsp;154, <I>&#147;Accounting Changes and Error
Corrections&#151;a replacement of APB Opinion No.&nbsp;20 and FASB Statement No.&nbsp;3,&#148; </I>was not yet
effective for TVA. In particular, TVA relied on paragraph 10 of APB Opinion No.&nbsp;20, which
provides as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Changes in estimates used in accounting are necessary consequences of periodic
presentations of financial statements. Preparing financial statements requires
estimating the effects of future events. Examples of items for which estimates are
necessary are uncollectible receivables, inventory obsolescence, service lives and
salvage values of depreciable assets, warranty costs, periods benefited by a
deferred cost, and recoverable mineral reserves. Future events and their effects
cannot be perceived with certainty; estimating, therefore, requires the exercise of
judgment. Thus accounting estimates change as new events occur, as more experience
is acquired, or as additional information is obtained.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 16<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In applying paragraph 10, TVA considered the fiscal 2006 change in estimation process to be
a result of experience gained through the process of estimation and a result of more
precise information being available at the individual customer level. The basic model did
not change; rather, the inputs to the model became more precise.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Conversely, the fiscal 2003 change in methodology was effected through a regulatory action
approved by the TVA Board, the body with the legal authority to set power rates for TVA.
The TVA Board determined it appropriate to change TVA&#146;s methodology for calculating
unbilled power revenue from a cumulative (from 1992) generation calculation to a daily
generation calculation for the days of revenue unbilled. The Board-approved change in
methodology represented a cumulative effect type accounting change since the original,
cumulative estimation process created permanent differences in actual versus estimated
unbilled revenue that would never have been recognized without a change in methodology.
The regulatory action was effective as of October&nbsp;1, 2002, and thus had no effect on TVA&#146;s
fiscal 2002 and prior financial condition or results of operations.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Upon implementation of the new methodology on the first day of fiscal 2003, TVA recognized
an increase in the estimated unbilled receivable balance with a corresponding cumulative
effect gain on the income statement. It would not have been appropriate to recognize this
gain as unbilled revenue in fiscal 2003 as the amount did not pertain to power sales for
fiscal 2003. In addition, it would not have been appropriate to restate the prior period
financial statements because the reported amounts of unbilled revenues were calculated in
accordance with the Board-approved methodology in effect during those periods.
Accordingly, TVA recognized the gain as a cumulative effect adjustment upon implementation
of the new Board-approved unbilled revenue methodology.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">The accounting treatment for the fiscal 2003 change is consistent with paragraph 32 of SFAS
No.&nbsp;71, which states as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">If a regulated enterprise changes accounting methods and the change affects
allowable costs for rate-making purposes, the change generally would be implemented
in the way that it is implemented for regulatory purposes.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Since (1)&nbsp;TVA is a regulated enterprise for purposes of SFAS No.&nbsp;71 that is regulated by
the TVA Board, (2)&nbsp;TVA changed its accounting methods in fiscal 2003, and (3)&nbsp;the change
affected allowable costs for rate-making purposes, SFAS No.&nbsp;71 provides that the change
should be implemented in the way that it is implemented for regulatory purposes. As
discussed above, the change was implemented for regulatory purposes as a cumulative effect
type accounting change pursuant to the fiscal 2003 determination by the TVA Board.</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 17<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Note 13. Commitments and Contingencies, page 110</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Legal Proceedings, page 114</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We note your disclosure that you are involved in various claims amounting to approximately
$54&nbsp;million, of which you have accrued $28&nbsp;million. It is unclear how these amounts relate to
the cases described following this disclosure. For each case, please clearly disclose the
amount accrued or, for those losses only reasonably possible, an estimate of the loss or range
of loss or state that such an estimate cannot be made. See paragraphs 9-10 of SFAS 5.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Based on its review of paragraphs 9 and 10 of SFAS No.&nbsp;5, <I>&#147;Accounting for Contingencies,&#148;</I>
and paragraph A-48 of American Institute of Certified Public Accountants Statement of
Position 94-6, &#147;<I>Disclosure of Certain Significant Risks and Uncertainties&#148; </I>(SOP 94-6), TVA
respectively submits that these standards do not <I>require </I>disclosure of specific litigation
accruals; rather, these standards clearly indicate that such disclosure is optional,
depending on the circumstances. For example, paragraph 9 of SFAS No.&nbsp;5 provides in
pertinent part as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Disclosure of the nature of an accrual made pursuant to the provisions of paragraph
8, <I>and in some circumstances the amount accrued</I>, may be necessary for the financial
statements not to be misleading. (Emphasis added.)</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Similarly, paragraph A-48 of SOP 94-6 provides in pertinent part as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">FASB Statement No.&nbsp;5 requires accrual of a loss contingency and disclosure of the
nature of the contingency, the exposure to loss in excess of the amount accrued,
and, <I>depending on the circumstances</I>, the amount accrued. (Emphasis added.)</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA believes that the aggregate amount of the accruals in question is adequate to ensure
the financial statements are not misleading, especially in light of TVA&#146;s inclusion of
additional disclosure as more fully described below.</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">To clarify how the amounts of the claims relate to the legal proceedings, TVA intends to
make the following revisions to Item&nbsp;3, Legal Proceedings and Note 13 &#151; <I>Legal Proceedings</I>
in its amended Annual Report:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA intends to revise the first paragraph of Item&nbsp;3, Legal Proceedings and
the first paragraph of Note 13 &#151; <I>Legal Proceedings </I>to read substantially as follows:</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 18<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA is subject to various legal proceedings and claims that have arisen in
the ordinary course of business. These proceedings and claims include the
matters discussed below.</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA proposes to revise the last two paragraphs of Item&nbsp;3, Legal Proceedings
and the last two paragraphs of Note 13 &#151; <I>Legal Proceedings </I>to read substantially as
follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In accordance with SFAS No.&nbsp;5, &#147;<I>Accounting for Contingencies,&#148; </I>TVA had
accrued approximately $22.9&nbsp;million with respect to the proceedings
described above as of September&nbsp;30, 2006, as well as approximately $5.1
million with respect to other proceedings that have arisen in the normal
course of TVA&#146;s business. No assurance can be given that TVA will not be
subject to significant additional claims and liabilities. If actual
liabilities significantly exceed the estimates made, TVA&#146;s results of
operations, liquidity, and financial condition could be materially
adversely affected.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;9A. Controls and Procedures, page 121</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The principal executive and principal financial officers, or persons performing similar
functions, are required to disclose their conclusions regarding the effectiveness of your
disclosure controls and procedures. See Item&nbsp;307 of Regulation&nbsp;S-K. Your disclosure sets
forth the conclusions of the Interim Chief Financial Officer, but it is unclear whether you
have included the principal executive officer&#146;s conclusions regarding effectiveness. We note
that Mr.&nbsp;Kilgore was appointed Chief Executive Officer in October&nbsp;2006 following your fiscal
year end. However, based on the response letter dated February&nbsp;28, 2006 that you e-mailed to
us on June&nbsp;13, 2006, we understand that there was an acting Chief Executive Officer as of
March&nbsp;31, 2006. Please revise to include the principal executive officer&#146;s conclusions
regarding effectiveness, disclose the date that Mr.&nbsp;Kilgore was appointed Chief Executive
Officer, and state, if true, that Mr.&nbsp;Kilgore was appointed Chief Executive Officer after the
evaluation was performed.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise the second paragraph of Item&nbsp;9A,
Controls and Procedures to read as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">An evaluation has been performed under the supervision of TVA management (including
the President and Chief Executive Officer, Tom D. Kilgore, who served as Acting
President and Chief Executive Officer from March&nbsp;31, 2006, until October&nbsp;13, 2006,
when he became President and Chief Executive Officer) and members of the Disclosure
Control Committee (including the Interim Chief Financial Officer and the Vice
President and Controller) of the effectiveness of TVA&#146;s disclosure controls</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 19<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">and procedures as of September&nbsp;30, 2006. Based on that evaluation, the President
and Chief Executive Officer and members of the Disclosure Control Committee
(including the Interim Chief Financial Officer and the Vice President and
Controller) concluded that, as a result of two material weaknesses identified
(described below), TVA&#146;s disclosure controls and procedures were not effective as
of September&nbsp;30, 2006. However, to assess the financial statement impact of these
internal control deficiencies, TVA performed additional analyses, interim
supplemental procedures, and monitoring activities subsequent to year end. As a
result of these supplemental procedures, the President and Chief Executive Officer,
the Interim Chief Financial Officer, and the Vice President and Controller have
determined that there is reasonable assurance that the financial statements
included in this Annual Report fairly present, in all material respects, TVA&#146;s
financial condition, results of operations, and cash flows as of, and for, the
periods presented.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We note that in the fifth paragraph you state: &#147;&#091;e&#093;xcept for the efforts taken and currently
underway as described above, there have been no changes. . . .&#148; Please revise to state
clearly, if correct, that there <I>were </I>changes in your internal control over financial reporting
that occurred during this quarter that have materially affected, or are reasonably likely to
materially affect, your internal control over financial reporting. Refer to Item 308(c) of
Regulation&nbsp;S-K.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to revise the fifth paragraph in Item&nbsp;9A,
Controls and Procedures to read substantially as follows:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">During the most recent fiscal quarter, there were changes in TVA&#146;s internal control
over financial reporting that materially affected, or are reasonably likely to
materially affect, TVA&#146;s internal control over financial reporting. These changes
are described in the preceding two paragraphs.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;10. Directors and Executive Officers of the Registrant, page 122</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Other Committees, page 126</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If applicable, provide the disclosure required by Item&nbsp;407 of Regulation&nbsp;S-K to the extent
required for an entity that does not have outstanding equity securities and as limited by the
Tennessee Valley Authority no-action letter dated December&nbsp;14, 2006.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 20<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">To address this comment, TVA intends to make the following changes in the amended Annual
Report:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In Item&nbsp;10, Directors, Executive Officers and Corporate Governance, TVA
intends to replace the disclosures under &#147;Audit Committee&#148; and &#147;Other Committees&#148; with
language that reads substantially as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>Committees of the TVA Board</B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA does not have a Nominating Committee. Each member of the TVA Board is
appointed by the President of the United States by and with the advice and
consent of the U. S. Senate. To be eligible to be appointed as a member
of the TVA Board, an individual must (1)&nbsp;be a citizen of the United
States, (2)&nbsp;have management expertise relative to a large for-profit or
nonprofit corporate, government, or academic structure, (3)&nbsp;not be an
employee of TVA, (4)&nbsp;make full disclosure to Congress of any investment or
other financial interest that the individual holds in the energy industry,
and (5)&nbsp;affirm support for the objectives and missions of TVA, including
being a national leader in technological innovation, low-cost power, and
environmental stewardship. At least seven of the Board members must be
legal residents of TVA&#146;s service area.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA has an Audit and Ethics Committee established in accordance with the
TVA Act. TVA&#146;s Audit and Ethics Committee consists of Robert M. Duncan,
its chair, Susan Richardson Williams, and Donald R. DePriest. None of the
members of the Audit and Ethics Committee has been determined to be an
&#147;audit committee financial expert&#148; under applicable SEC rules, as none of
the appointed TVA Board members was required by the TVA Act to meet the
criteria of an &#147;audit committee financial expert&#148; under applicable SEC
rules.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA is exempted by section 37 of the Securities Exchange Act from
complying with section 10A(m)(3) of the Securities Exchange Act, which
requires each member of a listed issuer&#146;s audit committee to be an
independent member of the board of directors of the issuer.
Notwithstanding this exemption, the TVA Act contains certain provisions
that are similar to the considerations for independence under section
10A(m)(3) of the Securities Exchange Act, including that to be eligible
for appointment to the TVA Board, an individual shall not be an employee
of TVA and shall make full disclosure to Congress of any investment or
other financial interest that the individual holds in the energy industry.</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 21<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">These provisions became applicable to the TVA Board members on March&nbsp;31,
2006.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Under section 10A(m)(2) of the Securities Exchange Act, which applies to
TVA, the audit committee is directly responsible for the appointment,
compensation, and oversight of the external auditor; however, the TVA Act
assigns the responsibility for engaging the services of the external
auditor to the TVA Board.</DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">On May&nbsp;18, 2006, the TVA Board approved the establishment of the following
committees in addition to the Audit and Ethics Committee:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Human Resources Committee</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Corporate Governance Committee</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Finance, Strategy and Rates Committee</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operations, Environment and Safety Committee</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Community Relations Committee</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In Item&nbsp;11, Executive Compensation of the amended Annual Report, TVA intends
to add the following language:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>Compensation Committee Report</B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA management prepared the Compensation Discussion and Analysis and
recommended to the TVA Board that the Compensation Discussion and Analysis
be included in the Annual Report. Based on this recommendation and its
review of the Compensation Discussion and Analysis, the TVA Board approved
including the Compensation Discussion and Analysis in the Annual Report.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">THE TVA BOARD

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Dennis C. Bottorff<BR>
Donald R. DePriest<BR>
Robert M. Duncan<BR>
Bishop William H. Graves<BR>
Skila S. Harris<BR>
William B. Sansom<BR>
Howard A. Thrailkill<BR>
Susan Richardson Williams

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In Item&nbsp;13, Certain Relationships and Related Transactions, and Director Independence,
TVA intends to include the following language:
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 22<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>Director Independence</B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA is exempted by section 37 of the Securities Exchange Act from
complying with section 10A(m)(3) of the Securities Exchange Act, which
requires each member of a listed issuer&#146;s audit committee to be an
independent member of the board of directors of the issuer.
Notwithstanding this exemption, the TVA Act contains certain provisions
that are similar to the considerations for independence under section
10A(m)(3) of the Securities Exchange Act, including that to be eligible
for appointment to the TVA Board, an individual shall not be an employee
of TVA, and shall make full disclosure to Congress of any investment or
other financial interest that the individual holds in the energy industry.
These provisions became applicable to the TVA Board members on March&nbsp;31,
2006.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;11. Executive Compensation, page 126</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please note that you must comply with all of the new executive compensation and related
person disclosure rulemaking, since you have chosen to comply early with these rules. Refer
to Questions 2 and 3 in the Executive Compensation and Related Person Disclosure Transition
Questions and Answers and Securities Act Release No.&nbsp;8732A. In this regard, please include
the executive and director compensation tables set forth in Item&nbsp;402 of Regulation&nbsp;S-K. We
note that you have provided a director compensation table that differs from the table required
by Item 402(k) of Regulation&nbsp;S-K and that you have not included the new summary compensation
table, grants of plan-based awards table, pension benefits table or nonqualified deferred
compensation table required by Item&nbsp;402(c), (d), (h)&nbsp;and (i)&nbsp;of Regulation&nbsp;S-K. Please
include the disclosure required by Item 404(b) of Regulation&nbsp;S-K regarding your policies and
procedures for the review, approval or ratification of related person transactions.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA intends to address this comment by revising Item&nbsp;11, Executive Compensation. A draft
of the revised Item&nbsp;11 is attached as Appendix&nbsp;A. In addition, TVA intends to add language
to Item&nbsp;13, Certain Relationships and Related Transactions, and Director Independence, that
is substantially similar to the following:</DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>Related Party Transactions</B></DIV>


<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">All TVA directors, officers, and employees are subject to a federal criminal
statute regarding conflicts of interest. This conflicts of interest statute
prohibits each director, officer, and employee of TVA from participating personally
and substantially (by advice, decision, or</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 23<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 6%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">otherwise) on behalf of TVA in any contract, controversy, proceeding, request for
determination, or other official particular matter which affects his or her
financial interest, the financial interest of his or her spouse or minor child, the
financial interest of any entity with which he or she serves as officer, director,
employee, trustee, or general partner, or the financial interest of any entity with
which he or she is negotiating, or has an arrangement, for future employment.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Executive Compensation, page 128</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please include a section entitled &#147;Compensation Discussion and Analysis&#148; and expand your
overview to provide additional analysis about your compensation objectives and policies.
Refer to Item&nbsp;402(b)(1) and (2).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA intends to address this comment by revising Item&nbsp;11, Executive Compensation. A draft
of the revised Item&nbsp;11 is attached as Appendix&nbsp;A.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As discussed above, we understand that you appointed an acting Chief Executive Officer as of
March&nbsp;31, 2006. If the acting Chief Executive Officer was a person other than Mr.&nbsp;Kilgore,
you should provide Item&nbsp;402 disclosure for that person. See Item&nbsp;402(a)(4) of Regulation&nbsp;S-K.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Kilgore was the acting Chief Executive Officer appointed by the TVA Board of Directors as
of March&nbsp;31, 2006.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;13. Certain Relationships and Related Transactions, page 136</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Comment:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">20.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please describe the terms of the appropriation investment and the $150&nbsp;million U.S. treasury
note.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>


<DIV align="left" style="margin-left: 3%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In its amended Annual Report, TVA intends to include in Item&nbsp;13, Certain Relationships and
Related Transactions, and Director Independence, language that reads substantially as follows:</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 24<BR>
April&nbsp;27, 2007

</DIV>

<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>Transactions with U.S. Treasury</B></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">TVA has access to financing arrangements with the U.S. Treasury under which the
U.S. Treasury is authorized to accept a short-term note with the maturity of one
year or less in an amount not to exceed $150&nbsp;million. TVA may draw any portion of
the authorized $150&nbsp;million during the year. Interest is accrued daily at a rate
determined by the United States Secretary of the Treasury each month based on the
average rate on outstanding marketable obligations of the United States with
maturities of one year or less. During 2006, the daily average outstanding balance
was $131&nbsp;million. See Note 9 &#151; <I>Short-Term Debt.</I></DIV>


<DIV align="left" style="margin-left: 9%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">In addition, TVA makes payments to the U.S. Treasury as a repayment of and a return
on the Appropriation Investment. Under the TVA Act, TVA is required to repay $1
billion of the Appropriation Investment, and $150&nbsp;million of this amount remained
unpaid as of September&nbsp;30, 2006. Once TVA repays this $150&nbsp;million, there will
still be an outstanding balance on the Appropriation Investment, and TVA is
obligated under the TVA Act to pay the U.S. Treasury a return on this remaining
balance indefinitely. See Notes 7 and 14.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with responding to your comments, TVA acknowledges that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA is responsible for the adequacy and accuracy of the disclosures in the Form 10-K
for the fiscal year ended September&nbsp;30, 2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Staff comments or changes to disclosure in response to Staff comments do not foreclose
the Commission from taking any action with respect to the Form 10-K for the year ended
September&nbsp;30, 2006; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>TVA may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If you have any questions regarding this response, please contact John Hoskins, Interim Chief
Financial Officer and Executive Vice President, Financial Services,
at (865)&nbsp;632-4049, or Mike Wills, Assistant General Counsel, Finance, at (865)&nbsp;632-7778.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Sincerely,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/s/ Tom Kilgore
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Enclosure
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">cc: See page 25
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;H. Christopher Owings<BR>
Page 25<BR>
April&nbsp;27, 2007

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">cc (Enclosure):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Mr.&nbsp;James Allegretto<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100 F Street, N.E.<BR>
Washington, DC 20549<BR>
Mail Stop 3561
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Ms.&nbsp;Sarah Goldberg<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100 F Street, N.E.<BR>
Washington, DC 20549<BR>
Mail Stop 3561
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Ms.&nbsp;Peggy Kim<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100 F Street, N.E.<BR>
Washington, DC 20549<BR>
Mail Stop 3561
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Ms.&nbsp;Ellie Quarles<BR>
Division of Corporation Finance<BR>
Securities and Exchange Commission<BR>
100 F Street, N.E.<BR>
Washington, DC 20549<BR>
Mail Stop 3561
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Mr.&nbsp;Michael A. Herman<BR>
PricewaterhouseCoopers LLP<BR>
One North Wacker<BR>
Chicago, Illinois 60606
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Ms.&nbsp;Diane T. Wear<BR>
PricewaterhouseCoopers LLP<BR>
2030 Falling Water Road<BR>
Suite&nbsp;280<BR>
Knoxville, Tennessee 37922
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APPENDIX A</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 11. EXECUTIVE COMPENSATION</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Director Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the beginning of 2006, the TVA Board consisted of two full-time members. On March&nbsp;31, 2006, the
TVA Board became a nine-member part-time board in accordance with the provisions of the
Consolidated Appropriations Act, 2005 (the &#147;Consolidated Appropriations Act&#148;), which amended the
TVA Act. Prior to this restructuring, the two incumbent directors, William W. Baxter and Skila S.
Harris, received salaries of $152,000 and $143,000, respectively. Under the TVA Act, as amended by
the Consolidated Appropriations Act, each director now receives a stipend of $45,000 per year
unless (1)&nbsp;the director is the chair of a TVA Board committee, in which case the stipend is $46,000
per year, or (2)&nbsp;the director is the chairman of the TVA Board, in which case the stipend is
$50,000 per year. Directors are also reimbursed under federal law for travel, lodging, and related
expenses that they incur in attending meetings and for other official TVA business in the same
manner as other persons employed intermittently in federal government service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The annual stipends provided to each director and to the chairman of the TVA Board as of September
30, 2006, were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Annual Stipend</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William W. Baxter <SUP style="font-size: 85%; vertical-align: text-top">1</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">45,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dennis C. Bottorff</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald R. DePriest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert M. Duncan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bishop William H. Graves <SUP style="font-size: 85%; vertical-align: text-top">2</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Skila S. Harris</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William B. Sansom</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Howard A. Thrailkill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Susan Richardson Williams</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Baxter resigned as a director as of January&nbsp;24, 2007.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
<TD>&nbsp;</TD>
<TD>Bishop William H. Graves became a director on October&nbsp;10, 2006. Director Graves
began receiving a stipend at a rate of $45,000
annually at that time.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table set outs the compensation received by TVA&#146;s directors during 2006.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Director Compensation</B>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Change in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Pension Value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>and</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Nonqualified</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fees Earned</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>or Paid in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Incentive Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Earnings </B><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(d)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(e)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(f)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(g)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(h)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William W. Baxter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">61,737</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">13,711</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">5</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">75,448</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dennis C. Bottorff</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">2,417</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald R. DePriest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1,047</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22,628</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Robert M. Duncan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">2,417</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bishop William H. Graves <SUP style="font-size: 85%; vertical-align: text-top">3</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Skila S. Harris</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">59,500</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">13,074</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">7</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">72,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">William B. Sansom</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">2,614</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">25,950</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Howard A. Thrailkill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1,275</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Susan Richardson Williams</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">2,420</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">24,026</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>TVA directors do not participate in the TVA Retirement System, TVA&#146;s Supplemental
Executive Retirement Plan, or any non-qualified deferred compensation plan available to TVA
employees. However, as appointed officers of the United States government, the directors are
members of the Federal Employees Retirement System (&#147;FERS&#148;). FERS is administered by the federal
Office of Personnel Management (&#147;OPM&#148;), and information regarding the value of FERS pension
benefits is not available to TVA.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Baxter served as Chairman of the TVA Board in a full-time capacity prior to its
restructuring and received a salary at the rate of $149,200 per year until January&nbsp;8, 2006. He
received a salary at the rate of $152,000 per year from January&nbsp;9, 2006, through March&nbsp;30, 2006,
after which time he began serving as a director in a part-time capacity and receiving a stipend at
a rate of $45,000 annually.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">3</sup></TD>
    <TD>&nbsp;</TD>
    <TD>Bishop William H. Graves did not become a director until October&nbsp;10, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Ms.&nbsp;Harris served as a director of the TVA Board in a full-time capacity prior to its
restructuring and received a salary at the rate of $140,300 per year until January&nbsp;8, 2006. She
received a salary at the rate of $143,000 per year from January&nbsp;9, 2006, through March&nbsp;30, 2006,
after which time she began serving as a director in a part-time capacity and receiving a stipend at
a rate of $45,000 annually. On May&nbsp;18, 2006, she was selected to chair the Human Resources
Committee and began receiving a stipend at a rate of $46,000 annually.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">5</sup></TD>
    <TD>&nbsp;</TD>
    <TD>Includes a $1,017 contribution by TVA to the Thrift Savings Plan (&#147;TSP&#148;) (equivalent
to one percent of Mr.&nbsp;Baxter&#146;s salary/stipend) and a $12,694 contribution by TVA to OPM to fund Mr.
Baxter&#146;s FERS pension.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">6</sup></TD>
    <TD>&nbsp;</TD>
    <TD>Represents amounts contributed by TVA to OPM to fund the director&#146;s FERS pension.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">7</sup></TD>
    <TD>&nbsp;</TD>
    <TD>Includes a $973 contribution by TVA to TSP (equivalent to one percent of Ms.&nbsp;Harris&#146;s
salary/stipend), a $3,892 matching contribution by TVA to TSP, and an $8,208 contribution by TVA to
OPM to fund Ms.&nbsp;Harris&#146;s FERS pension.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Directors are eligible to participate in TVA&#146;s health benefit plans and other non-retirement
benefit plans on the same terms and at the same contribution rates as other TVA employees. The
directors are not eligible to participate in any incentive programs available to TVA employees.
The directors do not participate in the TVA Retirement System and do not participate in TVA&#146;s
Supplemental Executive Retirement Plan. However, as appointed officers of the United States
government, the directors are members of the Federal Employees Retirement System (&#147;FERS&#148;).
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">FERS is a tiered retirement plan that includes three components: (1)&nbsp;Social Security benefits, (2)
the Basic Benefit Plan, and (3)&nbsp;the Thrift Savings Plan. Each director pays full Social Security
taxes and makes a small contribution (0.8&nbsp;percent of salary or stipend) to the Basic Benefit Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The FERS Basic Benefit Plan is a qualified defined benefit plan that provides a retirement benefit
based on a final average pay formula that includes age, highest average salary during any three
consecutive years of service, and years of creditable service. A director must have at least five
years of creditable service in order to be eligible to receive retirement benefits. Directors are
eligible for immediate, unreduced retirement benefits once (1)&nbsp;they reach age 62 and have five
years of creditable service, (2)&nbsp;they reach age 60 and have 20&nbsp;years of creditable service, or (3)
they attain the minimum retirement age and accumulate the specified years of service. Generally,
benefits are calculated by multiplying 1.0&nbsp;percent of the highest average salary during any three
consecutive years of service by the number of years of creditable service. Directors who retire at
age 62 or later with at least 20&nbsp;years of service receive an enhanced benefit (a factor of 1.1
percent is used rather than 1.0&nbsp;percent).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Directors may also retire with an immediate benefit under FERS if they reach their minimum
retirement age and have accumulated at least 10&nbsp;years of creditable service. For directors who
reach the minimum retirement age and have at least 10&nbsp;years of creditable service, the annuity will
be reduced by five percent for each year the director is under age 62.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Each director is also eligible to participate in the Thrift Savings Plan. The Thrift Savings Plan
is a tax-deferred retirement savings and investment plan that offers the same type of savings and
tax benefits offered under 401(k) plans. Once a director becomes eligible, after a mandatory
waiting period, TVA contributes an amount equal to one percent of the director&#146;s stipend into a
Thrift Savings Plan account for the director. These contributions are made automatically every two
weeks regardless of whether the director makes a contribution of his or her own money. Directors
are eligible to contribute up to the Internal Revenue Service (&#147;IRS&#148;) elective deferral limit.
Directors receive a matching contribution according to the following schedule: 100&nbsp;percent of each
dollar for the first three percent of the director&#146;s stipend, 50&nbsp;percent of each dollar for the
next two percent of the director&#146;s stipend, and zero percent for contributions above five percent
of the director&#146;s stipend.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation Discussion and Analysis</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Compensation Discussion and Analysis provides information about TVA&#146;s compensation philosophy
and strategy, as well as the policies and decisions that guided TVA in 2006 in establishing the
level and nature of the compensation provided to the President and Chief Executive Officer (&#147;CEO&#148;),
the Chief Financial Officer and Executive Vice President, Financial Services (&#147;CFO&#148;), and the three
most highly compensated executive officers other than the CEO and CFO. References to the &#147;Named
Executive Officers&#148; throughout this section refer to the executive officers listed in the Summary
Compensation Table.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority for the Executive Compensation Program</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The TVA Act is the primary statutory authority for TVA&#146;s compensation program and places
responsibility for establishing the compensation of all TVA employees, including the Named
Executive Officers, with the TVA Board. Under section 3 of the TVA Act, the TVA Board had the
authority in 2006 to fix the compensation of TVA employees without regard to the civil service laws
applicable to other federal employees. This authority has been substantially reinforced by the
amendments to the TVA Act contained in the Consolidated Appropriations Act, which became effective
on March&nbsp;31, 2006. These amendments, among other things, removed the statutory cap on the salaries
of TVA employees and authorized the TVA Board to establish a compensation plan for all TVA
employees based on surveys of the prevailing compensation for similar positions, including those in
private industry. A draft of a compensation plan for all TVA employees, including the Named
Executive Officers and other executives, is expected to be considered by the TVA Board in 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding section 3 of the TVA Act and the amendments to the TVA Act contained in the
Consolidated Appropriations Act, there are limits on the TVA Board&#146;s authority to set compensation
for its employees. One limit is TVA&#146;s statutory obligation to sell power at rates as low as
feasible. Implicit in this obligation is the requirement that TVA operate its power system as
efficiently and economically as possible, including limiting total compensation for senior
executives to that required to recruit, retain, and motivate them. However, providing inadequate
compensation levels to such executives could adversely affect TVA&#146;s efficiency and economy to an
even greater extent. A second limitation exists as a result of TVA&#146;s capital structure. The
United States government is TVA&#146;s sole owner. As a result, TVA does not have equity securities and
has no equity-based compensation. Accordingly, TVA is not able to provide some of the types of
compensation that many companies typically offer their named executive officers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Objective of the Executive Compensation Program</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under authority given to it by section 3 of the TVA Act, the previous TVA Board established a
compensation program, applicable to compensation paid in 2006, for TVA similar to compensation
programs of private sector companies, including companies in the energy services industry. This
compensation program is consistent with the requirements of the TVA Act and TVA&#146;s statutory mission
and objectives and at the same time addresses the needs of TVA to recruit and retain top talent.
This program is designed to fulfill the following purposes:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Provide a competitive level of compensation that enables TVA to attract, retain, and
motivate highly competent employees. </I>Each position in TVA has a pay level determined by
market pricing based on a level needed to attract, retain, and motivate employees critical to
TVA&#146;s success in achieving its mission. Overall compensation levels are targeted at the
median (50<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> percentile) of the relevant labor market for most positions. However,
for positions affected by market scarcity, recruitment and retention issues, and other
business reasons, overall compensation levels are targeted above the median (typically between
the 50<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> and 75<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> percentile). Certain</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>nuclear and transmission positions, for example, are targeted to higher overall compensation
levels because of these factors. Information about TVA&#146;s peer group and benchmarking practices
is provided below under the heading &#147;Use of Market Data and Benchmarking.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Encourage and reward senior executives for their performance and
contributions to the successful achievement of financial and
operational goals. </I>Approximately 40 to 50&nbsp;percent of overall
compensation for senior executives is performance-based
compensation. &#147;At risk&#148; incentive pay is directly linked to the
achievement of performance goals at the TVA level and the business
unit level. In 2006, the TVA Board approved the TVA level
performance goals and delegated authority to approve the business
level performance goals to its CEO, Mr.&nbsp;Kilgore. This substantial
emphasis on performance-based goals provides incentives to senior
executives to perform at the highest levels to achieve the goals
that are important for TVA.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Provide senior executives with the focus to achieve short-term and
long-term business goals that are important to TVA, TVA&#146;s
customers, and the people TVA serves. </I>TVA seeks to hire and
retain executives who are focused on both the short-term and
long-term success of TVA. The compensation program is designed to
achieve this goal by providing a mix of fixed base compensation
and at-risk annual and long-term incentive compensation. Base
compensation is fixed and designed to provide an immediate
financial incentive to executives. Annual and long-term
compensation is at-risk based on performance and is designed to
focus executives on the short-term and long-term goals of TVA.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Improve overall company performance through productivity
enhancement. </I>No senior executive can meet the goals of the
company and improve performance without the work of all employees
of the company. For this reason, the performance goals set at the
TVA level and business unit level are the same for both senior
executives and all non-executive employees. In this way, all TVA
employees receive compensation in a manner that aligns their work
with the same goals and encourages and rewards them for the
successful achievement of TVA&#146;s goals.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Use of Market Data and Benchmarking</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA seeks to establish overall compensation for executives at a competitive level with respect to
the relevant labor market. Competitive compensation levels are established for the Named Executive
Officers using relevant market data obtained through surveys and validated through recruitment and
periodic supplemental benchmark activities, including reviews of publicly-available proxy
statements and annual reports on Form 10-K. In establishing these compensation levels, TVA relies on benchmarking data collected
and analyzed by its Human Resources department with the assistance of an independent compensation
consultant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For 2006, TVA&#146;s relevant labor market for most senior management levels, including the Named
Executive Officers, was comprised of both private and publicly-owned companies in the energy
services industry of similar revenue and scope to TVA. When reviewing comparative compensation
information for executives, including the Named
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Executive
Officers, as a part of the survey-based analysis, TVA included the
following<BR>
energy services companies with annual revenues of $3&nbsp;billion and greater:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">AES Corp.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Energy East Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PPL Corp.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Allegheny Energy, Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Entergy Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Progress Energy, Inc.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">Ameren Corp.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exelon Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Public Service Enterprise Group, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">American Electric Power Co., Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FirstEnergy Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Reliant Energy, Inc.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">Atmos Energy Corp.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FPL Group, Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SCANA Corp.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">CenterPoint Energy, Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MDU Resources, Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sempra Energy</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">CMS Energy Corp.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Mirant Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Southern Company</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Consolidated Edison, Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nicor Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SUEZ Energy North America</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">Constellation Energy Group, Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NSTAR Electric Co.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">TECO Energy, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Dominion Resources, Inc.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">OGE Energy Corp.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">TXU Corp.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">DTE Energy Co.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ONEOK Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Williams Companies, Inc.</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Duke Energy Corp.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pacific Gas &#038; Electric Co.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wisconsin Energy Corp.</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">Edison International
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PacifiCorp
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">WPS Resources Corp. (now Intergrys Energy Group, Inc.)</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">El Paso Corp.
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pepco Holdings, Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Xcel Energy, Inc.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive Compensation Program Components</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA&#146;s compensation program for the Named Executive Officers consists primarily of the following
components:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>base compensation, consisting of salary paid biweekly and additional annual
compensation paid in quarterly installments;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>annual incentive compensation, which is at-risk and based on the attainment of certain
pre-established performance goals;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>long-term incentive compensation, which is at-risk and based on the attainment of
certain pre-established performance goals;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>long-term deferred compensation, which is awarded to participating executives in the
form of annual credits that vest after a specified period of time, typically three to five
years; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pension plans, both qualified and supplemental, which provide compensation beginning
with retirement or termination of employment provided certain eligibility and vesting
requirements are met.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">More information about the value of these various compensation components for the Named Executive
Officers is provided below under the Summary Compensation Table and the Grants of Plan-Based Awards
Table.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Base Compensation. </I>For the Named Executive Officers, base compensation includes salary plus
additional annual compensation. Base compensation received by executives is based on their levels
of responsibility, their individual merit performances, and the competitive levels of compensation
for executives in similar positions in the energy services industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to March&nbsp;31, 2006, the TVA Act provided that salaries for TVA employees, including the Named
Executive Officers, could match but not exceed the salary of a TVA Board member, which was itself
set by the TVA Act and by executive order of the President of the United States. In 2006, the
salary of a TVA Board member, and thus the maximum salary allowed for any TVA employee, was
$143,000. The Consolidated Appropriations Act amendments to the TVA Act removed this statutory
salary cap. As of September&nbsp;30, 2006, the TVA Board had approved, however, only one salary, that
of the interim Chief Operating Officer, in excess of the former salary cap.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the salary cap, in 2006 additional annual compensation was used, in conjunction with
salary, to provide a competitive level of base compensation to executives. Additional annual
compensation was paid in fixed quarterly installments. The total amounts of additional annual
compensation paid to the Named Executive Officers in 2006 appear in the &#147;Bonus&#148; column in the
Summary Compensation Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Base compensation is reviewed periodically by executive officers with the assistance of the Vice
President of Human Resources, and any recommended adjustments are submitted to the TVA Board or its
delegees for approval.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Annual Incentive Compensation. </I>All executives, including the Named Executive Officers, participate
in the Executive Annual Incentive Plan (&#147;EAIP&#148;). The EAIP is designed to encourage and reward
executives for their contributions to successfully achieving short-term financial and operational
goals of TVA and applicable business units. Under the EAIP, an executive&#146;s annual incentive
payment is calculated as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">EAIP
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Base
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">x
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Annual Incentive
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">x
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Percent of Opportunity</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">Payout
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Compensation
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Opportunity
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Achieved</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Annual incentive opportunities increase with position and responsibility. The annual incentive
opportunity is established for each of the Named Executive Officers based on the opportunities
other companies provide to those in comparable positions in the energy services industry.
Incentive opportunities are reviewed periodically by executive officers with the assistance of the
Vice President of Human Resources, and any recommended adjustments are submitted to the TVA Board
or its delegees for approval. The percent of opportunity achieved is determined by a weighted
average of the results of a combination of performance measures at the TVA level and the business
unit level. Performance measures at the TVA level and their weights are identified in TVA&#146;s
Winning Performance Balanced Scorecard. The performance measures and weights that are incorporated
into TVA&#146;s Winning Performance Balanced Scorecard are used in determining annual incentive payouts
not just for the Named Executive Officers but also for all other participants in the EAIP as well
as all other non-executive TVA employees who participate in TVA&#146;s Winning Performance Team
Incentive Plan. The performance
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">measures and weights approved by the TVA Board for the 2006 Winning Performance Balanced Scorecard
are set forth below:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Performance Measure</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Weight</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial Results</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Availability of Generation Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Labor Productivity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer Impact</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Economic Development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Environmental Impact</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Worker Safety</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Winning Performance Balanced Scorecard also established threshold, target, and maximum
achievement levels for each of the performance measures. Performance levels between threshold and
target achievement levels, and between target and maximum achievement levels, are calculated using
straight line interpolation. The Winning Performance Balanced Scorecard represented 30&nbsp;percent of
the potential payout for the Named Executive Officers. The remaining 70&nbsp;percent was tied to the
average composite performance of their appropriate business units or, in the case of Mr.&nbsp;Kilgore
and Mr.&nbsp;Rescoe, a composite average of all TVA business units.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Awards provided to the Named Executive Officers under this plan for the performance period that
ended on September&nbsp;30, 2006, are reported in the &#147;Non-Equity Incentive Plan Compensation&#148; column in
the Summary Compensation Table. Additional information regarding the basis of the payouts under
the EAIP is presented in the narrative that accompanies the Grants of Plan-Based Awards Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Long-Term Incentive Compensation. </I>In addition to the EAIP, certain executives in critical
positions, including the Named Executive Officers, participate in the Executive Long-Term Incentive
Plan (&#147;ELTIP&#148;). Executives in critical positions are those who make decisions that impact TVA&#146;s
long-term strategic objectives. The ELTIP is designed to encourage and reward executives for their
contributions to successfully achieving TVA&#146;s long-term financial and operational goals, typically
over a three-year performance cycle. The ELTIP performance cycles run concurrently, and
participating executives receive awards under the plan on an annual basis if targets are met.
Accordingly, in 2006, the ELTIP performed more as an annual incentive with the payout based on the
reduction of Bonds, lease financing obligations, and energy prepayment obligations during 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the ELTIP, an executive&#146;s incentive payment is calculated as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:15px; text-indent:-15px">ELTIP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">=
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Base
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">x
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ELTIP Incentive
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">x
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Percent of Opportunity</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">Payout
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Compensation
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Opportunity
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Achieved</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The ELTIP incentive opportunity is established for each of the Named Executive Officers at a level
that is similar but more conservative than the opportunities other companies provide to those in
comparable positions in the energy services industry. Incentive opportunities are reviewed
periodically by executive officers with the assistance of the Vice President of Human Resources,
and any recommended adjustments are submitted
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to the TVA Board or its delegees for approval. The percent of opportunity achieved is determined
based on the results of certain measures at the TVA level critical to satisfying TVA&#146;s long-term
strategic goals. In 2006, the performance metric used was the aggregate reduction of TVA&#146;s Bonds,
lease financing obligations, and energy prepayment obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Awards provided to the Named Executive Officers under this plan for the performance period that
ended on September&nbsp;30, 2006, are reported in the &#147;Non-Equity Incentive Plan Compensation&#148; column in
the Summary Compensation Table. Additional information regarding the basis of the payouts under
the ELTIP is presented in the narrative that accompanies the Grants of Plan-Based Awards Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Long-Term Deferred Compensation. </I>Unlike private sector companies in the energy services industry,
TVA is a corporate agency and instrumentality of the United States and thus does not have equity
securities to provide stock awards or options as a form of compensation for its employees. In
order to provide a benefit similar to restricted stock, TVA enters into agreements with certain
executives, including the Named Executive Officers, that are administered under TVA&#146;s Long-Term
Deferred Compensation Plan (&#147;LTDCP&#148;). The LTDCP agreements are designed to provide retention
incentives to executives to encourage them to remain with TVA and to provide, in combination with
base compensation and EAIP and ELTIP incentive awards, a competitive level of total compensation.
Under these agreements, credits (which may be vested or unvested) are made to an account in an
executive&#146;s name (typically on an annual basis) for a predetermined period. If the executive
remains employed at TVA until the end of this period (typically three to five years), the executive
becomes vested in the balance of the account, including any return on investment on the credits in
the account. Annual credits provided to the Named Executive Officers under LTDCP agreements in
2006 are reported in the &#147;All Other Compensation&#148; column in the Summary Compensation Table. These
credits are also reported in the &#147;Registrant Contributions in Last FY&#148; column in the Nonqualified
Deferred Compensation Table since the credits were placed in deferred compensation accounts in the
Named Executives Officers&#146; names and do not vest until a predetermined date in a later year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA has also entered into additional LTDCP agreements with Mr.&nbsp;Singer and Mr.&nbsp;Bhatnagar where the
amount of annual credits is based on the achievement of certain milestones with respect to the
recovery of Browns Ferry Unit 1 (&#147;Browns Ferry Unit 1 Recovery Project&#148;). The annual credits
provided to Mr.&nbsp;Singer and Mr.&nbsp;Bhatnagar under these agreements in 2006 are reported in the
&#147;Non-Equity Incentive Plan Compensation&#148; column in the Summary Compensation Table and the
&#147;Registrant Contributions in Last FY&#148; column in the Nonqualified Deferred Compensation Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Descriptions of all the LTDCP agreements with the Named Executive Officers are found following the
Grants of Plan-Based Awards Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Pension Benefits. </I>All of the Named Executive Officers are eligible to participate in the following
qualified plans available to all annual TVA employees:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Defined benefit plan</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Original Benefit Structure (&#147;OBS&#148;) for employees covered under the plan prior
to January&nbsp;1, 1996, with a pension based on a final average pay formula</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash Balance Benefit Structure (&#147;CBBS&#148;) for employees first hired on or after
January&nbsp;1, 1996, with a pension based on an account that receives pay credits equal to
six percent of compensation plus interest</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>401(k) plan</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For OBS members, TVA provides matching contributions of 25 cents on every
dollar up to 1.5&nbsp;percent of annual salary.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For CBBS members, TVA provides matching contributions of 75 cents on every
dollar up to 4.5&nbsp;percent of annual salary.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The availability of these qualified plans is consistent with similar qualified plans provided by
other companies in TVA&#146;s comparison groups.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, certain executives in critical positions, as determined by TVA on an individual basis,
are eligible to participate in a Supplemental Executive Retirement Plan (&#147;SERP&#148;). Each of the
Named Executive Officers participates in the SERP. The SERP is a non-qualified pension plan that
provides supplemental pension benefits tied to compensation levels that exceed limits imposed by
IRS regulations applicable to TVA&#146;s qualified plans. The availability of this supplemental pension
plan helps TVA to remain competitive in attracting and retaining top-level executives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">More information regarding these retirement and pension plans is found following the Pension
Benefits Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Perquisites. </I>TVA provides to certain employees, including two of the Named Executive Officers (Mr.
Singer and Mr.&nbsp;Bhatnagar), a flat-dollar biweekly vehicle allowance that may be applied toward the
purchase or lease of a vehicle, operating fees, excess mileage, maintenance, repairs, and
insurance. Vehicle allowances are granted on a &#147;business need&#148; basis to a very limited number of
officers and key managers with the approval of the TVA Board or its delegees. Information
regarding vehicle allowances granted to the Named Executive Officers is reported in the &#147;All Other
Compensation&#148; column in the Summary Compensation Table.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA does not provide to the Named Executive Officers any other perquisites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Health and Other Benefits. </I>TVA offers a group of health and other benefits (medical, dental,
vision, life and accidental death and disability insurance, and long-term disability insurance)
that are available to a broad group of employees. The Named Executive Officers are eligible to
participate in TVA&#146;s health benefit plans and other non-retirement benefit plans on the same terms
and at the same contribution rates as other TVA employees.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Executive Compensation Tables and Narrative Disclosures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Summary Compensation and Grants of Plan-Based Awards</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth information regarding compensation received by each of the Named
Executive Officers in 2006.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Summary Compensation Table</B>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="21%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Change in Pension</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Value and</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Nonqualified</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Incentive Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name and Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Bonus </B><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Award(s)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Earnings </B><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(d)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(e)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(f)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(g)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(h)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(i)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(j)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Tom D. Kilgore</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">511,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">627,861</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">169,614</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">8</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">306,300</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">13</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,755,759</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">President and Acting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Michael E. Rescoe</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">286,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">295,096</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">---</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">9</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">6,300</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">14</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">727,505</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chief Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">and Executive Vice President,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial Services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Karl W. Singer</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">341,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">580,275</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">5</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">365,355</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">10</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">211,700</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">15</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,638,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chief Nuclear Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">and Executive Vice</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">President, TVA Nuclear</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Ashok S. Bhatnagar</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">276,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">390,648</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">160,615</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">11</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">159,105</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">16</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,126,438</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Senior Vice President,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nuclear Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Joseph R. Bynum</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">275,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">279,253</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">7</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">189,639</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">12</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">150,269</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">17</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,034,227</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Executive Vice President,</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fossil Power</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents additional annual compensation paid in quarterly installments.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents the aggregate change in pension value under TVA&#146;s qualified defined benefit
plan and TVA&#146;s Supplemental Executive Retirement Plan (&#147;SERP&#148;).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $334,152 paid out under the EAIP and $293,709 paid out under the ELTIP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $195,075 paid out under the EAIP and $100,021 paid out under the ELTIP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">5</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $283,382 paid out under the EAIP, $216,893 paid out under the ELTIP, and a
credit in the amount of $80,000 made to Mr.&nbsp;Singer&#146;s deferred compensation account provided under a
LTDCP agreement with Mr.&nbsp;Singer for achievement of major milestones in 2006 associated with the
Browns Ferry Unit 1 Recovery Project. See information regarding the details of the LTDCP agreement
under &#147;Browns Ferry Unit 1 Recovery Milestone LTDCP Agreements&#148; following the Grants of Plan-Based
Awards Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $210,007 paid out under the EAIP, $140,641 paid out under the ELTIP, and a
credit in the amount of $40,000 made to Mr.&nbsp;Bhatnagar&#146;s deferred compensation account provided
under a LTDCP agreement with Mr.&nbsp;Bhatnagar for achievement of major milestones in 2006 associated
with the Browns Ferry Unit 1 Recovery Project. See information regarding the details of the LTDCP
agreement under &#147;Browns Ferry Unit 1 Recovery Milestone LTDCP Agreements&#148; following the Grants of
Plan-Based Awards Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">7</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $154,540 paid out under the EAIP and $124,713 paid out under the ELTIP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">8</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $8,882 under TVA&#146;s qualified defined benefit plan and $160,732 under the
SERP.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">






<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">9</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Rescoe left TVA effective November&nbsp;13, 2006, and did not meet the minimum five
years of creditable service required to become vested in TVA&#146;s qualified retirement plan and TVA&#146;s
SERP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">10</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $17,905 under TVA&#146;s qualified defined benefit plan and $347,450 under the
SERP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">11</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $12,945 under TVA&#146;s qualified defined benefit plan and $147,670 under the
SERP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">12</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes $23,824 under TVA&#146;s qualified defined benefit plan and $165,815 under the
SERP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">13</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes an unvested annual credit in the amount of $300,000 provided under a LTDCP
agreement with Mr.&nbsp;Kilgore and $6,300 in employer matching contributions to the TVA Retirement
System&#146;s 401(k) plan based on Mr.&nbsp;Kilgore&#146;s elective contribution. Mr.&nbsp;Kilgore will become vested
in the $300,000 credit in accordance with the terms of the agreement. See information regarding
the details of the LTDCP agreement under &#147;Long-Term Deferred Compensation Plan Agreements&#148;
following the Grants of Plan-Based Awards Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">14</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents employer matching contributions to the TVA Retirement System&#146;s 401(k) plan
based on Mr.&nbsp;Rescoe&#146;s elective contribution.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">15</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes an unvested annual credit in the amount of $200,000 provided under a LTDCP
agreement with Mr.&nbsp;Singer, $6,300 in employer matching contributions to the TVA Retirement System&#146;s
401(k) plan based on Mr.&nbsp;Singer&#146;s elective contribution, and $5,400 in vehicle allowance payments
(paid at the rate of $450 every two weeks beginning in April&nbsp;2006). Mr.&nbsp;Singer will become vested
in the $200,000 credit in accordance with the terms of the LTDCP agreement. See information
regarding the details of the LTDCP agreement under &#147;Long-Term Deferred Compensation Plan
Agreements&#148; following the Grants of Plan-Based Awards Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">16</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes an unvested annual credit in the amount of $150,000 provided under a LTDCP
agreement with Mr.&nbsp;Bhatnagar, $3,705 in employer matching contributions to the TVA Retirement
System&#146;s 401(k) plan based on Mr.&nbsp;Bhatnagar&#146;s elective contribution, and $5,400 in vehicle
allowance payments (paid at the rate of $450 every two weeks beginning in April&nbsp;2006). Mr.
Bhatnagar will become vested in the $150,000 credit in accordance with the terms of the LTDCP
agreement. See information regarding the details of the LTDCP agreement under &#147;Long-Term Deferred
Compensation Plan Agreements&#148; following the Grants of Plan-Based Awards Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">17</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes an unvested annual credit in the amount of $150,000 provided under a LTDCP
agreement with Mr.&nbsp;Bynum and $269 in employer matching contributions to the TVA Retirement System&#146;s
401(k) plan based on Mr.&nbsp;Bynum&#146;s elective contribution. Mr.&nbsp;Bynum became vested in the $150,000
credit and all previous unvested credits and earnings received under his five-year LTDCP agreement
upon expiration of the agreement on September&nbsp;30, 2006. See information regarding the details of
the LTDCP agreement under &#147;Long-Term Deferred Compensation Plan Agreements&#148; following the Grants of
Plan-Based Awards Table.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information regarding non-equity incentive plan awards and the
possible range of payouts associated with incentives the Named Executive Officers were eligible to
receive for performance in the performance cycles ending in 2006.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Grants of Plan-Based Awards Table</B>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Grant Date</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>Estimated Possible Payouts Under</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>Estimated Future Payouts Under</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>or Base</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fair Value</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Non-Equity Incentive Plan Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Equity Incentive Plan Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Stock</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>and Option</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Grant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Threshold</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Target</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Threshold</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Target</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>or Units</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>or Units</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Awards</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($/Sh)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(d)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(e)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(f)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(g)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(h)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(i)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(j)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(k)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(l)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Tom D. Kilgore</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">EAIP<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">341,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">455,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">568,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">ELTIP<SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">292,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">390,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">487,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Michael E. Rescoe</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">EAIP<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">199,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">265,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">332,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">ELTIP<SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">99,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">132,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">166,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Karl W. Singer</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">EAIP<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">252,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">336,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">420,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">ELTIP<SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">216,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">288,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">BFNU1-LTDCP<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Ashok S. Bhatnagar</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">EAIP<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">186,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">249,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">311,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">ELTIP<SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">140,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">186,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">233,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">BFNU1-LTDCP<SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Joseph R. Bynum</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">EAIP<SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">170,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">227,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">284,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">ELTIP<SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">124,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">165,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">207,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Actual awards earned for performance in 2006 are reported for each of the Named
Executive Officers under &#147;Non-Equity Incentive Plan Compensation&#148; in the Summary Compensation
Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Actual awards earned for the performance period ending on September&nbsp;30, 2006, are
reported for each of the Named Executive Officers under &#147;Non-Equity Incentive Plan Compensation&#148; in
the Summary Compensation Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>In accordance with agreements administered under TVA&#146;s LTDCP, Mr.&nbsp;Singer and Mr.
Bhatnagar were eligible to receive these credits based on the achievement of major milestones in
association with the Browns Ferry Unit 1 Recovery Project. The actual credits earned and vested
based on the level of achievement in 2006 are reported under &#147;Non-Equity Incentive Plan
Compensation&#148; in the Summary Compensation Table.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Executive Annual Incentive Plan Awards. </I>All of the Named Executive Officers were participants
in the Executive Annual Incentive Plan (&#147;EAIP&#148;) in 2006. As discussed in the Compensation
Discussion and Analysis, the EAIP is designed to encourage and reward executives for their
contributions to successfully achieving short-term financial and operational goals of TVA and
applicable business units. Incentive opportunities approved by the TVA Board for Mr.&nbsp;Kilgore and
Mr.&nbsp;Rescoe and by Mr.&nbsp;Kilgore for Mr.&nbsp;Singer, Mr.&nbsp;Bhatnagar, and Mr.&nbsp;Bynum for the performance
period ending on September&nbsp;30, 2006, were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Incentive Opportunity </B><SUP style="font-size: 85%; vertical-align: text-top"><B>1</B></SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tom D. Kilgore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael E. Rescoe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">62.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Karl W. Singer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ashok S. Bhatnagar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph R. Bynum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">55</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents a percentage of each participant&#146;s base compensation.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The percent of opportunity achieved is determined by a weighted average of the results of a
combination of performance measures at the TVA level and business unit level. For 2006, the
performance measures at the TVA level were approved by the TVA Board and set forth in TVA&#146;s Winning
Performance Balanced Scorecard. The performance measures for TVA&#146;s business units were approved by
Mr.&nbsp;Kilgore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Awards earned under the EAIP for 2006 were made during the first quarter of 2007. All awards were
paid in cash with a deferral option. Only Mr.&nbsp;Kilgore elected to defer his EAIP award earned for
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Executive Long-Term Incentive Plan Awards. </I>All of the Named Executive Officers were participants
in the Executive Long-Term Incentive Plan (&#147;ELTIP&#148;) in 2006. As discussed in the Compensation
Discussion and Analysis, the ELTIP is designed to encourage and reward executives for their
contributions to successfully achieving long-term financial and operational goals, typically over a
three-year performance cycle. Even though the ELTIP is based on three-year performance cycles, the
cycles run concurrently to provide participating executives potential ELTIP awards on an annual
basis. As a result, the ELTIP has administratively functioned in a manner similar to an annual
incentive plan with targets set and awards made with respect to a one-year period.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Incentive opportunities approved by the TVA Board for Mr.&nbsp;Kilgore and Mr.&nbsp;Rescoe and by Mr.&nbsp;Kilgore
for Mr.&nbsp;Singer, Mr.&nbsp;Bhatnagar, and Mr.&nbsp;Bynum under the ELTIP for the performance period ending on
September&nbsp;30, 2006, were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Incentive Opportunity </B><SUP style="font-size: 85%; vertical-align: text-top"><B>1</B></SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tom D. Kilgore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael E. Rescoe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.25</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Karl W. Singer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ashok S. Bhatnagar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">45</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph R. Bynum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents a percentage of each participant&#146;s base compensation.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the performance period ending on September&nbsp;30, 2006, the threshold, target, and maximum
awards were equal to 75&nbsp;percent, 100&nbsp;percent and 125&nbsp;percent of the participant&#146;s incentive
opportunity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As set forth in the Compensation Discussion and Analysis, the calculation of the ELTIP awards for
the performance period ending on September&nbsp;30, 2006, was based solely of the performance of a
financial measure, namely, the aggregate reduction in TVA&#146;s Bonds, lease financing obligations, and
energy prepayment obligations. The following goals were established related to the reduction in
TVA&#146;s Bonds, lease financing obligations, and energy prepayment obligations: threshold ($340
million reduction), target ($420&nbsp;million reduction), and maximum ($500&nbsp;million reduction). In
2006, TVA achieved 75.31&nbsp;percent of the target goal set forth above. As a result, each of the
Named Executive Officers received an ELTIP payout for the performance period ended on September&nbsp;30,
2006, equal to 75.31&nbsp;percent of their respective incentive opportunity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payments earned under the ELTIP for the performance period ending on September&nbsp;30, 2006, were made
during the first quarter of 2007. All awards were paid in cash with a deferral option. Mr.
Kilgore elected to defer all of his ELTIP award earned for the performance period ending on
September&nbsp;30, 2006, and Mr.&nbsp;Bynum elected to defer 50&nbsp;percent of his ELTIP award earned for the
same performance period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Long-Term Deferred Compensation Plan Agreements. </I>Agreements administered under TVA&#146;s Long-Term
Deferred Compensation Plan (&#147;LTDCP&#148;) are designed to provide retention incentives to executives to
encourage them to remain with TVA and to provide, in combination with base compensation and EAIP
and ELTIP incentive awards, a competitive level of total compensation. LTDCP agreements act as
substitutes for restricted stock awards, which investor-owned utilities in TVA&#146;s comparison group
can offer to their executives, but which TVA cannot offer. Under the LTDCP agreements, credits
(which may be vested or unvested) are made to an account in an executive&#146;s name (typically on an
annual basis) for a predetermined period. If the executive remains employed at TVA until the end
of the vesting period (typically three to five years), the executive becomes vested in the balance
of the account, including a return on investment, and receives a distribution in accordance with an
earlier deferral election.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2005, TVA entered into a LTDCP agreement with Mr.&nbsp;Kilgore. Under the terms of the
agreement, Mr.&nbsp;Kilgore receives annual deferred compensation credits of $300,000 for a period of
four years and seven months beginning in March&nbsp;2005 and ending in September&nbsp;2009. Pursuant to the
agreement, Mr.&nbsp;Kilgore was vested in the first credit of $300,000 at the time the credit was made
in March&nbsp;2005. Mr.&nbsp;Kilgore will vest in the remaining balance of his account only if he remains
employed by TVA until the expiration of the agreement on September&nbsp;30, 2009, after which the
account will be distributed in accordance with his deferral election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2004, TVA entered into a LTDCP agreement with Mr.&nbsp;Singer. Under the terms of the agreement,
Mr.&nbsp;Singer receives annual deferred compensation credits of $200,000 for a period of five years
beginning in October&nbsp;2004 and ending in September&nbsp;2009. Mr.&nbsp;Singer will be vested and eligible to
receive payment of one-half of his account balance on September&nbsp;30, 2007, and one-half of the
remaining balance again on September&nbsp;30, 2008, as long as he remains employed with TVA on each of
those vesting dates. Mr.&nbsp;Singer will vest in the remaining balance of his account only if he
remains employed with TVA until the expiration of the agreement on September&nbsp;30, 2009, after which
the account will be distributed in accordance with his deferral election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2004, TVA entered into a LTDCP agreement with Mr.&nbsp;Bhatnagar. Under the terms of the
agreement, Mr.&nbsp;Bhatnagar receives annual deferred compensation credits of $150,000 for a period of
five years beginning in October&nbsp;2004 and ending in September&nbsp;2009. Mr.&nbsp;Bhatnagar will vest in the
balance of his account if he remains employed by TVA until the expiration of the agreement on
September&nbsp;30, 2009, after which the account will be distributed in accordance with his deferral
elections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA entered into a LTDCP agreement with Mr.&nbsp;Bynum in 2001 that provided annual deferred
compensation credits of $140,000 for a period of five years. The agreement was later amended to
increase the annual credits from $140,000 to $150,000 in 2004 through 2006. Pursuant to the
agreement, Mr.&nbsp;Bynum received the full balance of his account on September&nbsp;30, 2006, since he
remained employed by TVA until that date. The balance of Mr.&nbsp;Bynum&#146;s account, which includes the
credits and earnings on such credits provided under this LTCDP agreement, has been deferred based
on Mr.&nbsp;Bynum&#146;s previous election.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Browns Ferry Unit 1 Recovery Milestone LTDCP Agreements</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to the LTDCP agreement with Mr.&nbsp;Singer described above, TVA has entered into a second
LTDCP agreement with Mr.&nbsp;Singer that provides annual credits of up to $100,000 for a period of four
years based on the accomplishment of major milestones associated with the Browns Ferry Unit 1
Recovery Project. The actual amount credited each year is based on the achievement of specific
milestones established at the beginning of each fiscal year. Under this agreement, credits earned
will be vested and credited to a deferred compensation account in Mr.&nbsp;Singer&#146;s name at the end of
each fiscal year. For 2006, there were 35 milestone objectives established for Mr.&nbsp;Singer&#146;s
agreement, and 80&nbsp;percent of those objectives (28 out of 35) were met. As a result, Mr.&nbsp;Singer was
awarded a credit of $80,000 for 2006, which, under the terms of the
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">agreement, has been placed in a deferred compensation account in his name to be distributed in a
lump sum upon termination of employment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition to the LTDCP agreement with Mr.&nbsp;Bhatnagar described above, TVA has entered into a
second LTDCP agreement with Mr.&nbsp;Bhatnagar that provides annual credits of up to $50,000 for a
period of four years based on the accomplishment of major milestones associated with the Browns
Ferry Unit 1 Recovery Project. The actual amount credited each year is based on the achievement of
specific milestones established at the beginning of each fiscal year. Under this agreement,
credits earned will be vested and credited to a deferred compensation account in Mr.&nbsp;Bhatnagar&#146;s
name at the end of each fiscal year. For 2006, there were 35 milestone objectives established for
Mr.&nbsp;Bhatnagar&#146;s agreement, and 80&nbsp;percent of those objectives (28 out of 35) were met. As a
result, Mr.&nbsp;Bhatnagar was awarded a credit of $40,000 for 2006, which, under the terms of the
agreement, has been placed in a deferred compensation account in his name to be distributed in a
lump sum upon termination of employment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Retirement and Pension Plans</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides the actuarial present value of the Named Executive Officer&#146;s
accumulated benefits, including the number of years of credited service, under TVA&#146;s retirement and
pension plans as of September&nbsp;30, 2006, determined using interest rate and mortality rate
assumptions consistent with those used in the financial statements contained in this Annual Report.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Pension Benefits Table</B>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Years</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Credited</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Present Value of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Payments During</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Service</B><SUP style="font-size: 85%; vertical-align: text-top"><B>1</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Accumulated Benefit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Last Fiscal Year</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Plan Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(#)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(d)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(e)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tom D. Kilgore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(1) Qualified Plan -- CBBS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(2) Non-Qualified -- SERP</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.58</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">160,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael E. Rescoe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(1) Qualified Plan -- CBBS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">0</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(2) Non-Qualified -- SERP</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">0</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Karl W. Singer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(1) Qualified Plan -- CBBS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">169,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(2) Non-Qualified -- SERP</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.50</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,234,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ashok S. Bhatnagar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(1) Qualified Plan -- CBBS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">82,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(2) Non-Qualified -- SERP</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">416,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph R. Bynum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(1) Qualified Plan -- OBS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">941,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(2) Non-Qualified -- SERP</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,897,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Limited to 24&nbsp;years when determining supplemental benefits available under TVA&#146;s SERP.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Kilgore has been granted three additional years of credited service for pre-TVA employment following five years
of actual TVA service. In the event his employment is terminated during the first five years (other than for cause), the
five-year vesting requirement will be waived and he will receive credit for eight years of service. In addition, the offset for
prior employer pension benefits will be waived, and the offset for benefits provided under TVA&#146;s defined benefit plan will be
calculated based on the actual pension benefit he will receive as a participant in TVA&#146;s CBBS.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>TVA has agreed to grant Mr.&nbsp;Singer up to six additional years of credited service at the rate of one year&#146;s service
for each year of TVA service, beginning August&nbsp;17, 2006 (age 50), and continuing through August&nbsp;17, 2011 (age 55). Therefore, as
of September&nbsp;30, 2006, Mr.&nbsp;Singer has been granted one year of additional service for purposes of the calculation of his benefit
under the SERP. Without the one year of additional service, the present value of Mr.&nbsp;Singer&#146;s accumulated benefit would be
$1,143,214.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Rescoe left TVA in November&nbsp;2006 and did not have the minimum five years of creditable service required to
become vested and receive a retirement benefit under TVA&#146;s qualified plan or TVA&#146;s SERP.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA sponsors a qualified defined benefit plan with two structures for all employees, including
the Named Executive Officers, which is administered by the TVA Retirement System. The structures
are the OBS and the CBBS. Participation in the OBS is limited to employees who were covered under
the plan prior to January&nbsp;1, 1996. All employees first hired by TVA on or after January&nbsp;1, 1996,
participate in the CBBS. As with any other qualified retirement plan, there are limits on employee
and employer contributions and compensation that can be counted for benefit calculations set by the
TVA Retirement System rules and IRS regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>TVA&#146;s Original Benefit Structure. </I>Mr.&nbsp;Bynum is the only Named Executive Officer who participates
in the OBS. The pension provided under the OBS is based on a final average pay formula that
includes the member&#146;s years (to the nearest month) of creditable service, highest average
compensation during any three consecutive years of creditable service, and a pension factor, less a
small Social Security offset. For executives who are members of the OBS, compensation is defined
as annual salary only for benefit calculation purposes and, for the Named Executive Officers, is
shown under the column titled &#147;Salary&#148; in the Summary Compensation Table. Creditable service is
the length of time spent as a member of the TVA Retirement System and may also include certain
military service, some periods of leave without pay, forfeited annual leave, and unused sick leave.
The pension factor, which can reach a maximum of 1.3&nbsp;percent, is determined by a member&#146;s age
and/or whether the member has obtained the Rule of 80. The Rule of 80 is the sum of a member&#146;s age
and creditable service at the time of termination. For example, a member who has reached age 55
and has 25&nbsp;years of creditable service has obtained the Rule of 80. Mr.&nbsp;Bynum has obtained the
Rule of 80. Members must have at least five years of creditable service in order to be eligible
for a pension benefit. Members who are 55 with five years of creditable service are eligible to
receive an immediate benefit upon retirement. Members whose age plus service, including unused
sick leave and forfeited annual leave, equals 80 points or more receive the maximum pension factor
of 1.3&nbsp;percent. Members who reach age 60 with at least five years of credited service receive the
maximum pension factor of 1.3&nbsp;percent even if they do not have 80 points.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>TVA&#146;s Cash Balance Structure. </I>Mr.&nbsp;Kilgore, Mr.&nbsp;Singer, and Mr.&nbsp;Bhatnagar are members of the CBBS,
and Mr.&nbsp;Rescoe was a member of the CBBS. Under the CBBS, each member has a cash balance account
that receives pay credits equal to six percent of his/her compensation each pay period (every two
weeks). For executives who are members of the CBBS, compensation is defined as annual base salary
only for benefit calculation purposes and, for the Named Executive Officers, is shown under the
column titled &#147;Salary&#148; in the Summary Compensation Table. The account is credited with interest
each month, and interest is compounded on an annual basis. The annual interest rate used for
interest credits is determined each January 1. The interest rate is three percent greater than the
increase in the 12-month average of the Consumer Price
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Index for the period ending on the previous October&nbsp;31. The minimum interest rate is six percent
and the maximum interest rate is ten percent unless the TVA Retirement System Board, with TVA&#146;s
approval, selects a higher interest rate. When a member elects to begin receiving retirement
benefits, the cash balance account is converted to a monthly pension payment by dividing the ending
value of the cash balance account by a conversion factor set forth in the plan based on the
member&#146;s actual age in years and months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Members with at least five years of CBBS service are eligible to receive an immediate benefit.
CBBS service is the length of time spent as a member of TVA Retirement System and does not include
credit for unused sick leave, forfeited annual leave, or pre-TVA employment military service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Supplemental Executive Retirement Plan. </I>The SERP is a non-qualified defined benefit pension plan
similar to those typically found in other companies in TVA&#146;s comparison groups and is provided to a
limited number of TVA executives, including the Named Executive Officers. TVA&#146;s SERP was created
to recruit and retain key executives. The plan is designed to provide a competitive level of
retirement benefits in excess of the limitations on contributions and benefits imposed by TVA&#146;s
qualified defined benefit plan and IRS code section 415 limits on qualified retirement plans.
Specifically, the plan is designed to replace 60&nbsp;percent of the amount of a participant&#146;s
compensation that is excluded from the calculation of pension benefits under TVA&#146;s qualified
defined benefit plan at the time the participant reaches age 62 and has accrued 24&nbsp;years of service
at TVA. The plan recognizes additional annual compensation and annual incentives in the definition
of compensation for supplemental benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SERP benefits are based on a participant&#146;s highest average compensation during three consecutive
SERP years and a pension multiple of 2.5&nbsp;percent for each year of credited service up to a maximum
of 24&nbsp;years. Compensation is defined as salary, additional annual compensation, and EAIP for
benefit calculation purposes. Normal retirement eligibility is age 62 with five years of vesting
service. No benefits are payable prior to age 55, and benefits are reduced for retirements between
age 55 and 62. The SERP requires participants to have 24&nbsp;years of credited service in order to
receive full supplemental benefits at age 62. Executives with less credited service, or who retire
prior to their normal retirement date, are eligible to receive reduced benefits. Participants must
be employed by TVA for five years in order to be eligible to receive benefits under the SERP.
Benefits are offset by Social Security benefits, benefits provided under TVA&#146;s defined benefit
plan, and prior employer pension benefits when applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>The TVA Sponsored 401(k) Plan. </I>Members of the TVA Retirement System, including the Named Executive
Officers, may elect to participate in the TVA Retirement System&#146;s 401(k) plan on a before- and/or
after-tax basis. For OBS members, TVA provides a matching contribution of 25 cents on every dollar
contributed on a before- and/or after-tax basis up to 1.5&nbsp;percent of the participant&#146;s annual
salary. For CBBS members, TVA provides a matching contribution of 75 cents on every dollar
contributed on a before- and/or after-tax basis up to 4.5&nbsp;percent of the participant&#146;s annual
salary.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Nonqualified Deferred Compensation</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table provides information regarding deferred contributions, earnings, and balances
for each of the Named Executive Officers. The amounts reported under this table do not represent
compensation in addition to the compensation that was earned in 2006 and already reported in the
Summary Compensation Table but rather the amounts of compensation earned by the Named Executive
Officers in 2006 or prior years that was or has been deferred.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Nonqualified Deferred Compensation Table</B>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Executive</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Registrant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Aggregate</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Contributions in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Contributions in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Earnings in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Withdrawals/</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Balance at</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Last FY</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Last FY</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Last FY </B><SUP style="font-size: 85%; vertical-align: text-top"><B>1</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Distributions </B><SUP style="font-size: 85%; vertical-align: text-top"><B>2</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Last FY </B><SUP style="font-size: 85%; vertical-align: text-top"><B>3</B></SUP></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>($)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>(a)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(b)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(c)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(d)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(e)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(f)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tom D. Kilgore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">627,861</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">300,000</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">48,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">74,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">880,160</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">10</SUP></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael E. Rescoe</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">40,054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">147,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">428,414</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">11</SUP></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Karl W. Singer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">280,000</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">7</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">115,002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">172,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">2,403,178</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">12</SUP></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ashok S. Bhatnagar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">190,000</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">8</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">119,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">132,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1,861,863</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">13</SUP></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph R. Bynum</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">62,356</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top"> 5</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">150,000</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">9</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">98,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">142,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1,700,399</TD>
    <TD nowrap> <SUP style="font-size: 85%; vertical-align: text-top">14</SUP></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes vested and unvested earnings.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">2</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents distribution of monthly deferred compensation credits received in 2005 and
paid out in 2006 based on elections made at the beginning of 2005. Recipients were permitted to
elect to receive a distribution of up to 50&nbsp;percent of the monthly deferred compensation credits
they received in 2005 in a lump sum cash payment following the end of 2005. Mr.&nbsp;Kilgore elected to
receive a distribution equal to 25&nbsp;percent, and each of the remaining Named Executive Officers
elected to receive a distribution equal to 50&nbsp;percent. Cash distributions were paid during the
first quarter of 2006 (October&nbsp;2005).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">3</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes vested and unvested amounts.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">4</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Kilgore elected to defer 100&nbsp;percent of the $334,152 paid out under the EAIP for
2006 and 100&nbsp;percent of the $293,709 paid out under the ELTIP for the performance period ending on
September&nbsp;30, 2006. These amounts are reported in the &#147;Non-Equity Incentive Plan Compensation&#148;
column in the Summary Compensation Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">5</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Bynum elected to defer 50&nbsp;percent of the $124,713 paid out under the ELTIP for the
performance period ending on September&nbsp;30, 2006. This amount is reported in the &#147;Non-Equity
Incentive Plan Compensation&#148; column in the Summary Compensation Table.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">6</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents an unvested annual credit in the amount of $300,000 provided under a LTDCP
agreement with Mr.&nbsp;Kilgore (reported in the &#147;All Other Compensation&#148; column in the Summary
Compensation Table).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">7</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents (1)&nbsp;an unvested annual credit in the amount of $200,000 provided under a
LTDCP agreement with Mr.&nbsp;Singer (reported in the &#147;All Other Compensation&#148; column in the Summary
Compensation Table) and (2)&nbsp;a credit in the amount of $80,000 provided under a second LTDCP
agreement with Mr.&nbsp;Singer for achievement of major milestones in 2006 associated with the Browns
Ferry Unit 1 Recovery Project (reported in the &#147;Non-Equity Incentive Plan Compensation&#148; column in
the Summary Compensation Table).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">8</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents (1)&nbsp;an unvested annual credit in the amount of $150,000 provided under a
LTDCP agreement with Mr.&nbsp;Bhatnagar (reported in the &#147;All Other Compensation&#148; column in the Summary
Compensation Table) and (2)&nbsp;a vested credit in the amount of $40,000 provided under a second LTDCP
agreement with Mr.&nbsp;Bhatnagar for the achievement of major milestones in 2006 associated with the
Browns Ferry Unit 1 Recovery Project (reported in the &#147;Non-Equity Incentive Plan Compensation&#148;
column in the Summary Compensation Table).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">9</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents an unvested annual credit in the amount of $150,000 provided under a LTDCP
agreement with Mr.&nbsp;Bynum (reported in the &#147;All Other Compensation&#148; column in the Summary
Compensation Table). Mr.&nbsp;Bynum became fully vested</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>in this credit, as well as all other credits and earnings on such credits provided under his LTDCP
agreement, upon expiration of the agreement on September&nbsp;30, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">10</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents the balance of Mr.&nbsp;Kilgore&#146;s account, including unvested credits and
earnings totaling $312,729, as of September&nbsp;30, 2006. The amount reported in the &#147;Executive
Contributions in Last FY&#148; column was credited to his account in the first quarter of 2007 and is
not included in the balance.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">11</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Rescoe was fully vested in all credits and earnings reflected in the balance of
his account as of September&nbsp;30, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">12</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents the balance of Mr.&nbsp;Singer&#146;s account, including unvested credits and
earnings totaling $398,032, as of September&nbsp;30, 2006. The $80,000 credit provided under the LTDCP
agreement with Mr.&nbsp;Singer for the achievement of major milestones in 2006 associated with the
Browns Ferry Unit 1 Recovery Project, reported in the &#147;Executive Contributions in Last FY&#148; column,
was credited to his account in the first quarter of 2007 and is not included in the balance.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">13</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Represents the balance of Mr.&nbsp;Bhatnagar&#146;s account, including unvested credits and
earnings totaling $321,847, as of September&nbsp;30, 2006. The $40,000 credit provided under the LTDCP
agreement with Mr.&nbsp;Bhatnagar for the achievement of major milestones in 2006 associated with the
Browns Ferry Unit 1 Recovery Project, reported in the &#147;Executive Contributions in Last FY&#148; column,
was credited to his account in the first quarter of 2007 and is not included in the balance.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">14</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Bynum was fully vested in all credits and earnings reflected in the balance of
his account as of September&nbsp;30, 2006. The amount reported in the &#147;Executive Contributions in Last
FY&#148; column was credited to his account in the first quarter of 2007 and is not included in the
balance.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In order to further assist executives, including the Named Executive Officers, in saving for
retirement, TVA allows participants in the EAIP, ELTIP, and LTDCP to elect to defer all or a
portion of the compensation earned under those plans. All deferrals are credited to each
participant, and the deferral amounts are then funded into a rabbi trust. Each participant may
elect one or more of several notional investment options made available by TVA or allow some or all
funds to accrue interest at the rate established at the beginning of each fiscal year.
Participants may elect to change from either one notional investment option or the TVA interest
bearing option to another at any time. Participants do not have the ability withdraw funds from
their accounts prior to termination of employment with TVA. Upon termination, funds are
distributed in accordance with elections made in accordance with applicable IRS regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No executives, including the Named Executive Officers, were permitted to defer any portion of their
annual salary or additional annual compensation in 2006. Participants in the EAIP and ELTIP,
including the Named Executive Officers, are permitted to elect annually to defer all or a portion
of their awards (25, 50, 75 or 100&nbsp;percent) received under the plans. As previously noted, in
2006, Mr.&nbsp;Kilgore elected to defer 100&nbsp;percent of his EAIP and ELTIP awards, and Mr.&nbsp;Bynum elected
to defer 50&nbsp;percent of his ELTIP award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2005, TVA entered into an agreement with Mr.&nbsp;Kilgore that provides a lump sum payment
equal to one year&#146;s annual compensation if (1)&nbsp;he was not appointed as TVA&#146;s Chief Executive
Officer, (2)&nbsp;his duties and/or responsibilities are reduced, (3)&nbsp;his compensation is substantially
reduced, and he terminates his employment with TVA, or (4)&nbsp;his employment is terminated for any
reason other than &#147;for cause.&#148; For purposes of this agreement, &#147;annual compensation&#148; is defined as
annual salary plus additional annual compensation plus the amount of the annual and long-term
incentive awards he
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt">would have been eligible to receive based on 100&nbsp;percent achievement of target performance goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2004, TVA entered into an agreement with Mr.&nbsp;Rescoe that provided a lump sum payment in an
amount equal to two years&#146; compensation in the event that there is a change in his reporting
relationship with the TVA Board such that he would report to a Chief Executive Officer or other
similarly named executive and is asked to leave TVA employment or is asked to take a position with
TVA other than his then current position as Chief Financial Officer and Executive Vice President,
Financial Services, prior to July&nbsp;10, 2008. For purposes of this agreement, &#147;annual compensation&#148;
was defined as annual salary plus additional annual compensation plus the amount of the annual and
long-term incentive awards he would have been eligible to receive based on 100&nbsp;percent achievement
of target performance goals. Under the agreement, Mr.&nbsp;Rescoe was to receive the lump sum payment
in two equal installments: the first installment was to be paid within ten days of the effective
date he leaves TVA and the second was to be paid on the one-year anniversary of that date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Rescoe left TVA effective November&nbsp;13, 2006. Pursuant to the agreement, TVA paid Mr.&nbsp;Rescoe
the first of two installments in the amount of $823,438 in November&nbsp;2006. The second installment
will be paid to Mr.&nbsp;Rescoe in November&nbsp;2007.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation Committee Interlocks and Insider Participation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The TVA Board established the Human Resources Committee on May&nbsp;18, 2006. The committee consists of
the following four directors: Skila S. Harris, Chair, Dennis C. Bottorff, Susan Richardson
Williams, and Howard A. Thrailkill. The committee is reviewing a compensation plan covering all
TVA employees that it intends to submit to the TVA Board for consideration during 2007.
Additionally, the committee will review the compensation of the CEO and his direct reports, monitor
the process for approving compensation for TVA employees compensated in excess of the federal
government&#146;s Executive Schedule&nbsp;Level IV ($143,000 as of September&nbsp;30, 2006), monitor TVA executive
compensation programs, and periodically review the compensation and benefits programs for all TVA
employees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the TVA Act, as amended by the Consolidated Appropriations Act, the TVA Board has the
authority to approve salaries in excess of the federal government&#146;s Executive Schedule&nbsp;Level IV.
While the Human Resources Committee can recommend that the TVA Board approve compensation, the
committee has no authority to approve compensation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">No executive officer of TVA serves on the board of an entity which in turn has an executive officer
of the entity serving as a director of TVA.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Compensation Committee Report</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TVA management prepared the Compensation Discussion and Analysis and recommended to the TVA Board
that the Compensation Discussion and Analysis be included in the Annual Report. Based on this
recommendation and its review of the Compensation Discussion and Analysis, the TVA Board approved
including the Compensation Discussion and Analysis in the Annual Report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">THE TVA BOARD
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Dennis C. Bottorff<BR>
Donald R. DePriest<BR>
Robert M. Duncan<BR>
Bishop William H. Graves<BR>
Skila S. Harris<BR>
William B. Sansom<BR>
Howard A. Thrailkill<BR>
Susan Richardson Williams
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
