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Risk Management Activities and Derivative Transactions (Tables)
 3 Months Ended
Dec. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Offsetting Assets and Liabilities [Table Text Block]
The amounts of TVA's derivative instruments as reported in the consolidated balance sheets as of December 31, 2013, and September 30, 2013, are shown in the table below.

 
As of December 31, 2013
 
Gross Amounts of Recognized Assets/Liabilities
 
Gross Amounts Offset in the Balance Sheet (1)
 
Net Amounts of Assets/Liabilities Presented in the Balance Sheet (2)
Assets
 
 
 
 
 
Currency swaps
$
78

 
$
(74
)
 
$
4

Commodity derivatives under FTP
70

 
(69
)
 
1

Total derivatives subject to master netting or similar arrangement
148

 
(143
)
 
5

Total derivatives not subject to master netting or similar arrangement
4

 
—

 
4

 
 
 
 
 
 
Total
$
152

 
$
(143
)
 
$
9

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Currency swaps (3)
$
(12
)
 
$
—

 
$
(12
)
Interest rate swaps (3)
(1,060
)
 
—

 
(1,060
)
Commodity derivatives under FTP
(202
)
 
152

 
(50
)
Total derivatives subject to master netting or similar arrangement
(1,274
)
 
152

 
(1,122
)
Total derivatives not subject to master netting or similar arrangement
(150
)
 
—

 
(150
)
 
 
 
 
 
 
Total
$
(1,424
)
 
$
152

 
$
(1,272
)
 
 
 
 
 
 
 
As of September 30, 2013
 
Gross Amounts of Recognized Assets/Liabilities
 
Gross Amounts Offset in the Balance Sheet (1)
 
Net Amounts of Assets/Liabilities Presented in the Balance Sheet (2)
Assets
 
 
 
 
 
Currency swaps
$
61

 
$
(33
)
 
$
28

Commodity derivatives under FTP
101

 
(98
)
 
3

Total derivatives subject to master netting or similar arrangement
162

 
(131
)
 
31

Total derivatives not subject to master netting or similar arrangement
3

 
—

 
3

 
 
 
 
 
 
Total
$
165

 
$
(131
)
 
$
34

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Currency swaps (3)
$
(15
)
 
$
—

 
$
(15
)
Interest rate swaps (3)
(1,199
)
 
—

 
(1,199
)
Commodity derivatives under FTP
(267
)
 
198

 
(69
)
Total derivatives subject to master netting or similar arrangement
(1,481
)
 
198

 
(1,283
)
Total derivatives not subject to master netting or similar arrangement
(144
)
 
—

 
(144
)
 
 
 
 
 
 
Total
$
(1,625
)
 
$
198

 
$
(1,427
)
Notes
(1) Amounts primarily include counterparty netting of derivative contracts, margin account deposits for futures commission merchants transactions, and cash collateral received or paid in accordance with the accounting guidance for derivatives and hedging transactions.
(2) There are no derivative contracts subject to a master netting arrangement or similar agreement which are not offset in the balance sheets.
(3) Letters of credit of approximately $800 million were posted as collateral at December 31, 2013 and September 30, 2013, to partially secure the liability positions of the currency swap and a certain interest rate swap in accordance with the collateral requirements for these derivatives.
Summary of Derivative Instruments That Receive Hedge Accounting Treatment
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
 
2013
 
2012
 
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 AOCI and reclassified to interest expense to the extent they are offset by cumulative gains and losses on the hedged transaction
 
$
20

 
$
33

 
Notes
(1) Mark-to-Market ("MtM")
(2) Other Comprehensive Income (Loss) ("OCI")
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
 
2013
 
2012
 
Currency swaps
 
$
22

 
$
5

 

Note
There were no ineffective portions or amounts excluded from effectiveness testing for any of the periods presented. Based on forecasted foreign currency exchange rates, TVA expects to reclassify approximately $51 million of losses from AOCI to interest expense within the next twelve months to offset amounts anticipated to be recorded in interest expense related to exchange gain on the debt.
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
 
2013
 
2012
 
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.
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
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.

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
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.
 
(20
)
 
(45
)
 

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, 2013, and 2012.

Mark-to-Market Value of TVA Derivatives
Mark-to-Market Values of TVA Derivatives
 
At December 31, 2013
 
At September 30, 2013
Derivatives that Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Currency swaps
 
 
 
 
 
 
 
£200 million Sterling
$
(12
)
 
Other long-term liabilities
 
$
(15
)
 
Other long-term liabilities
£250 million Sterling
62

 
Other long-term assets
 
51

 
Other long-term assets
£150 million Sterling
16

 
Other long-term assets
 
10

 
Other long-term assets
 
 
 
 
 
 
 
 
Derivatives that Do Not Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Interest rate swaps
 
 
 
 
 
 
 
$1.0 billion notional
(789
)
 
Other long-term liabilities
 
(886
)
 
Other long-term liabilities
$476 million notional
(259
)
 
Other long-term liabilities
 
(300
)
 
Other long-term liabilities
$42 million notional
(12
)
 
Other long-term liabilities
 
(13
)
 
Other long-term liabilities
Commodity contract derivatives
(146
)
 
Other current assets $4; Other long-term liabilities $(44); Accounts payable and accrued liabilities $(106)
 
(141
)
 
Other long-term assets $1; Other current assets $2; Other long-term liabilities $(35); Accounts payable and accrued liabilities $(109)
Derivatives under FTP(1)
(132
)
 
Other current assets $(82); Other long-term liabilities $(29); Accounts payable and accrued liabilities $(21)
 
(166
)
 
Other current assets $(97); Other long-term liabilities $(36); Accounts payable and accrued liabilities $(33)

Note
(1)  Fair values of certain derivatives under the FTP that were in net liability positions totaling $83 million and $100 million at December 31, 2013 and September 30, 2013, respectively, are recorded in TVA's margin cash accounts in Other current assets. These derivatives are transacted with futures commission merchants and cash deposits have been posted to the margin cash accounts held with each FCM to offset the net liability positions in full.
Currency Swaps Outstanding
TVA had the following currency swaps outstanding as of December 31, 2013:

Currency Swaps Outstanding
At December 31, 2013
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, 2013
 
At September 30, 2013
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
Coal contract derivatives
18
 
41 million tons
 
$
(145
)
 
19
 
43 million tons
 
$
(140
)
Natural gas contract derivatives
8
 
23 million mmBtu
 
$
(1
)
 
13
 
39 million mmBtu
 
$
(1
)
Derivatives Under Financial Trading Program
Derivatives Under Financial Trading Program
 
At December 31, 2013
 
At September 30, 2013
 
Notional Amount
 
Fair Value (MtM)
(in millions)
 
Notional Amount
 
Fair Value (MtM)
(in millions)
Natural gas (in mmBtu)
 
 
 
 
 
 
 
Futures contracts
—

 
$
—

 
—

 
$
—

Swap contracts
142,767,500

 
(134
)
 
152,922,500

 
(169
)
Option contracts
—

 
—

 
—

 
—

Natural gas financial positions
142,767,500

 
$
(134
)
 
152,922,500

 
$
(169
)
 
 
 
 
 
 
 
 
Fuel oil/crude oil (in barrels)
 
 
 

 
 
 
 

Futures contracts
—

 
$
—

 
—

 
$
—

Swap contracts
—

 
2

 
1,205,000

 
3

Option contracts
—

 
—

 
—

 
—

Fuel oil/crude oil financial positions
—

 
$
2

 
1,205,000

 
$
3


Note
Fair value amounts presented are based on net commodity position with the FCM or other counterparty. Notional amounts disclosed represent the net absolute value of contractual amounts.
FTP Unrealized Gains (Losses)
Financial Trading Program Unrealized Gains (Losses)
 
 
 
 
 
FTP unrealized gains (losses) deferred as regulatory liabilities (assets)
 
At December 31, 2013
 
At September 30, 2013
 
 
 
 
 
Natural gas
 
$
(134
)
 
$
(169
)
Fuel oil/crude oil
 
2

 
3
FTP Realized Gains (Losses)
Financial Trading Program Realized Gains (Losses)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
December 31
 
Decrease (increase) in fuel expense
 
2013
 
2012
 
 
 
 
 
 
 
Natural gas
 
$
(15
)
 
$
(28
)
 
Fuel oil/crude oil
 
1

 
2

 
Coal
 
—

 
(1
)
 

Financial Trading Program Realized Gains (Losses)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
December 31
 
Decrease (increase) in purchased power expense
 
2013
 
2012
 
 
 
 
 
 
 
Natural gas
 
$
(6
)
 
$
(19
)