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Risk Management Activities and Derivative Transactions (Tables) | 3 Months Ended
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Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Summary of Derivative Instruments That Receive Hedge Accounting Treatment |
Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2)
|  | Amount of Gain (Loss) Reclassified from OCI to Interest Expense Three Months Ended December 31
Derivatives in Cash Flow Hedging Relationship |  | 2012 |  | 2011
Currency swaps |  | $ | (5 | ) |  | $ | 3 |
Note There were no ineffective portions or amounts excluded from effectiveness testing for any of the periods presented. The following tables summarize the accounting treatment that certain of TVA's financial derivative transactions receive.
Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 1)
|  |  |  |  |  | Amount of Mark-to-Market(1) Gain (Loss) Recognized in Other Comprehensive Income (Loss)(2) Three Months Ended December 31
Derivatives in Cash Flow Hedging Relationship |  | Objective of Hedge Transaction |  | Accounting for Derivative Hedging Instrument |  | 2012 |  | 2011
Currency swaps |  | To protect against changes in cash flows caused by changes in foreign currency exchange rates (exchange rate risk) |  | Cumulative unrealized gains and losses are recorded in OCI and reclassified to interest expense to the extent they are offset by cumulative gains and losses on the hedged transaction |  | $ | 33 |  |  | $ | 42 |
Notes (1) Mark-to-Market ("MtM") (2) Other Comprehensive Income (Loss) ("OCI")
Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment |
Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment
|  |  |  |  |  | Amount of Gain (Loss) Recognized in Income on Derivatives Three Months Ended December 31(1)
Derivative Type |  | Objective of Derivative |  | Accounting for Derivative Instrument |  | 2012 |  | 2011
Interest rate swaps |  | To fix short-term debt variable rate to a fixed rate (interest rate risk) |  | MtM gains and losses are recorded as regulatory assets or liabilities until settlement, at which time the gains/losses are recognized in gain/loss on derivative contracts.(2) |  | $ | — |  |  | $ | — |
Commodity contract derivatives |  | To protect against fluctuations in market prices of purchased coal or natural gas (price risk) |  | MtM gains and losses are recorded as regulatory assets or liabilities. Realized gains and losses due to contract settlements are recognized in fuel expense as incurred. |  | — |  |  | (7 | )
Commodity derivatives under financial trading program ("FTP") |  | To protect against fluctuations in market prices of purchased commodities (price risk) |  | MtM gains and losses are recorded as regulatory assets or liabilities. Realized gains and losses are recognized in fuel expense or purchased power expense when the related commodity is used in production. |  | (45 | ) |  | (56 | )
Note (1) All of TVA's derivative instruments that do not receive hedge accounting treatment have unrealized gains (losses) that would otherwise be recognized in income but instead are deferred as regulatory assets and liabilities. As such, there was no related gain (loss) recognized in income for these unrealized gains (losses) for the three months ended December 31, 2012, and 2011. (2) Generally, TVA maintains a level of discount notes equal to or greater than the notional amount of the interest rate swaps. However, in December 2012, TVA issued $1.0 billion of long-term Bonds in anticipation of 2013 maturities. As a result, TVA paid down discount notes which caused the discount note balance outstanding at December 31, 2012 to be below the notional amount of the interest rate swaps. There is no statement of operations impact of this due to the use of regulatory accounting for these items.
Mark-to-Market Value of TVA Derivatives |
Mark-to-Market Values of TVA Derivatives
| At December 31, 2012 |  | At September 30, 2012
Derivatives that Receive Hedge Accounting Treatment:
| Balance |  | Balance Sheet Presentation |  | Balance |  | Balance Sheet Presentation
Currency swaps |  |  |  |  |  |  |
£200 million Sterling | $ | (15 | ) |  | Other long-term liabilities |  | $ | (23 | ) |  | Other long-term liabilities
£250 million Sterling | 34 |  |  | Other long-term assets |  | 21 |  |  | Other long-term assets
£150 million Sterling | (19 | ) |  | Other long-term liabilities |  | (31 | ) |  | Other long-term liabilities
Derivatives that Do Not Receive Hedge Accounting Treatment:
| Balance |  | Balance Sheet Presentation |  | Balance |  | Balance Sheet Presentation
Interest rate swaps |  |  |  |  |  |  |
$1.0 billion notional | (1,167 | ) |  | Other long-term liabilities |  | (1,247 | ) |  | Other long-term liabilities
$476 million notional | (424 | ) |  | Other long-term liabilities |  | (458 | ) |  | Other long-term liabilities
$42 million notional | (18 | ) |  | Other long-term liabilities |  | (18 | ) |  | Other long-term liabilities
Commodity contract derivatives | (224 | ) |  | Other long-term assets $97; Other current assets $14; Other long-term liabilities $(189); Accounts payable and accrued liabilities $(146) |  | (267 | ) |  | Other long-term assets $107; Other current assets $12; Other long-term liabilities $(205); Accounts payable and accrued liabilities $(181)
Derivatives under FTP |  |  |  |  |  |  |
Margin cash account(1) | 15 |  |  | Other current assets |  | 43 |  |  | Other current assets
Derivatives under FTP(2) | (240 | ) |  | Other long-term assets $1; Other current assets $(121); Other long-term liabilities $(50); Accounts payable and accrued liabilities $(70) |  | (229 | ) |  | Other long-term assets $2; Other current assets $(104); Other long-term liabilities $(60); Accounts payable and accrued liabilities $(67)
Notes (1) In accordance with certain credit terms, TVA uses leverage to trade financial instruments under the FTP. Therefore, the margin cash account balance does not represent 100 percent of the net market value of the derivative positions outstanding as shown in the Derivatives Under Financial Trading Program table. (2) The December 31, 2012, and September 30, 2012 balances in the Derivatives Under Financial Trading Program table show all open derivative positions in the FTP.
Currency Swaps Outstanding | TVA had the following currency swaps outstanding as of December 31, 2012:
Currency Swaps Outstanding At December 31, 2012
Effective Date of Currency Swap Contract |  | Associated TVA Bond Issues Currency Exposure |  | Expiration Date of Swap |  | Overall Effective Cost to TVA
1999 |  | £200 million |  | 2021 |  | 5.81%
2001 |  | £250 million |  | 2032 |  | 6.59%
2003 |  | £150 million |  | 2043 |  | 4.96%
Commodity Contract Derivatives |
Commodity Contract Derivatives
| At December 31, 2012 |  | At September 30, 2012
| Number of Contracts |  | Notional Amount |  | Fair Value (MtM) |  | Number of Contracts |  | Notional Amount |  | Fair Value (MtM)
Coal contract derivatives | 21 |  | 48 million tons |  | $ | (224 | ) |  | 23 |  | 46 million tons |  | $ | (267 | )
Natural gas contract derivatives | 25 |  | 55 million mmBtu |  | $ | — |  |  | 25 |  | 51 million mmBtu |  | $ | — |
Derivatives Under Financial Trading Program |
Derivatives Under Financial Trading Program
| At December 31, 2012 |  | At September 30, 2012
| Notional Amount |  | Fair Value (MtM) (in millions) |  | Notional Amount |  | Fair Value (MtM) (in millions)
Natural gas (in mmBtu) |  |  |  |  |  |  |
Futures contracts | — |  |  | $ | — |  |  | — |  |  | $ | — |
Swap contracts | 237,485,000 |  |  | (241 | ) |  | 294,462,500 |  |  | (232 | )
Option contracts | — |  |  | — |  |  | — |  |  | — |
Natural gas financial positions | 237,485,000 |  |  | $ | (241 | ) |  | 294,462,500 |  |  | $ | (232 | )
Fuel oil/crude oil (in barrels) |  |  |  |  |  |  |  |  |
Futures contracts | — |  |  | $ | — |  |  | — |  |  | $ | — |
Swap contracts | 1,349,000 |  |  | 1 |  |  | 1,390,000 |  |  | 4 |
Option contracts | — |  |  | — |  |  | — |  |  | — |
Fuel oil/crude oil financial positions | 1,349,000 |  |  | $ | 1 |  |  | 1,390,000 |  |  | $ | 4 |
Coal (in tons) |  |  |  |  |  |  |  |  |  |  |
Futures contracts | — |  |  | $ | — |  |  | — |  |  | $ | — |
Swap contracts | — |  |  | — |  |  | — |  |  | — |
Option contracts | — |  |  | — |  |  | — |  |  | — |
Coal financial positions | — |  |  | $ | — |  |  | — |  |  | $ | — |
Note Due to the right of setoff and method of settlement, TVA elects to record commodity derivatives under the FTP based on its net commodity position with the broker or other counterparty. Notional amounts disclosed represent the net absolute value of contractual amounts.
FTP Unrealized Gains (Losses) |
FTP Unrealized Gains (Losses)
FTP unrealized gains (losses) deferred as regulatory liabilities (assets) |  | At December 31, 2012 |  | At September 30, 2012
Natural gas |  | $ | (241 | ) |  | $ | (232 | )
Fuel oil/crude oil |  | 1 |  |  | 4 |
FTP Realized Gains (Losses) |
FTP Realized Gains (Losses)
|  | For the Three Months Ended December 31
(Increase) decrease in fuel expense |  | 2012 |  | 2011
Natural gas |  | $ | (28 | ) |  | $ | — |
Fuel oil/crude oil |  | 2 |  |  | 5 |
Coal |  | (1 | ) |  | — |
FTP Realized Gains (Losses)
|  | For the Three Months Ended December 31
(Increase) decrease in purchased power expense |  | 2012 |  | 2011
Natural gas |  | $ | (19 | ) |  | $ | (61 | )

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