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<SEC-DOCUMENT>0001376986-08-000032.txt : 20080805
<SEC-HEADER>0001376986-08-000032.hdr.sgml : 20080805
<ACCEPTANCE-DATETIME>20080805162153
ACCESSION NUMBER:		0001376986-08-000032
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20080730
ITEM INFORMATION:		Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
FILED AS OF DATE:		20080805
DATE AS OF CHANGE:		20080805

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-52313
		FILM NUMBER:		08991662

	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>8-K
<SEQUENCE>1
<FILENAME>tva8-k.htm
<DESCRIPTION>TENNESSEE VALLEY AUTHORITY
<TEXT>
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    <title>tva8-k.htm</title>
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STATES</font></div>
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AND EXCHANGE COMMISSION</font></div>
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D.C. 20549</font></div>
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8-K</font></div>
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REPORT</font></div>
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to Section 13, 15(d), or 37 of the Securities Exchange Act of 1934</font></div>
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VALLEY AUTHORITY</font></div>
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appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:</font></div>
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communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)</font></div>
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material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)</font></div>
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communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</font></div>
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communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</font></div>
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</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit
Report or Completed Interim Review.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July 30, 2008,
management of the Tennessee Valley Authority (&#8220;TVA&#8221;) and the Audit, Governance,
and Ethics Committee of the Board of Directors agreed that TVA&#8217;s financial
statements for the fiscal years ended September 30, 2006 and 2007, and the
quarterly periods ended December 31, 2006, March 31, 2007, June 30, 2007,
December 31, 2007, and March 31, 2008, should not be relied upon due to errors
in the estimates of unbilled revenue.&#160;&#160;TVA will be restating its
financial statements for these periods by amending the relevant periodic
reports.</font></font></div>
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wholesale provider of power to distributor customers (&#8220;customers&#8221;) that resell
the power to end users at retail rates.&#160;&#160;Under TVA&#8217;s end-use billing
arrangements with its customers, TVA relies on the customers to report their
end-use sales.&#160;&#160;Because of the delay between the wholesale delivery of
power to the customer and the report of end-use sales to TVA, TVA must estimate
the unbilled revenue at the end of each financial reporting
period.&#160;&#160;In September 2006, TVA implemented a change in methodology
for estimating unbilled revenue for electricity sales.&#160;&#160;As noted in
TVA&#8217;s Annual Report on Form 10-K/A for the year ended September 30, 2006, this
change resulted in an increase of $232 million in unbilled revenue for fiscal
year 2006.&#160;&#160;The estimation process&#160;implemented in September 2006
utilized the customers&#8217; average rates and an estimate of the number of days of
revenue outstanding that reflects the delay in reporting the end-use sales to
TVA (&#8220;days outstanding&#8221;).&#160;&#160;The number of days outstanding was derived
by regression analysis.&#160;&#160;TVA has determined that this method
overestimated the days outstanding.&#160;&#160;TVA is further changing its
estimation process to use TVA meter data and individual distributor wholesale
bill dates.</font></font></div>
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evaluating the impact of these errors.&#160;&#160;TVA estimates that the impact
from the errors was an overstatement of net income for the fiscal year ended
September 30, 2006, and understatements of net income for the fiscal year ended
September 30, 2007, and the six months ended March 31, 2008.&#160;&#160;TVA
estimates that the changes to the financial statements as of or for the
respective periods will primarily involve total assets and retained earnings on
the balance sheets, and revenues and net income on the statements of
income.&#160;&#160;The errors and restatements have no impact on net cash
provided by operating activities.</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
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preliminary and are subject to change during the restatement
process.&#160;&#160;Additional adjustments to TVA&#8217;s financial statements may be
determined to be necessary during the restatement process.</font></font></div>
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determined that the errors resulted from a material weakness related to the
processes, procedures, and controls surrounding the calculation of unbilled
revenue; accordingly, the discussion of management&#8217;s evaluation of TVA&#8217;s
disclosure controls and procedures in the periodic reports mentioned above will
be revised as appropriate.</font></div>
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</font></div>
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</font></div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 24pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In order
to remediate this material weakness, TVA is taking the following steps: (i)
performing additional analysis on TVA&#8217;s unbilled revenue estimates; (ii)
expanding the management review of the assumptions in the calculation; and (iii)
further documenting the procedures to manage changes in the process of
estimating unbilled revenue.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.35">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 28pt; LINE-HEIGHT: 1.35; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TVA
management and the Audit, Governance, and Ethics Committee have discussed the
matters disclosed in this Current Report on Form 8-K with Ernst and Young LLP,
TVA&#8217;s current registered independent public accounting firm.&#160;&#160;In
addition, TVA management has discussed these matters with PricewaterhouseCoopers
LLP, TVA&#8217;s registered independent public accounting firm for the fiscal years
ended September 30, 2006 and 2007.&#160;&#160; </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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