Asset Retirement Obligations

6 Months Ended

Mar. 31, 2015

Asset Retirement Obligation Disclosure [Abstract]

During the six months ended March 31, 2015, TVA's total ARO liability increased $54 million.

To estimate its decommissioning obligation related to its nuclear generating stations, TVA uses a probability-weighted, discounted cash flow model which, on a unit-by-unit basis, considers multiple outcome scenarios that include significant estimations and assumptions. Those assumptions include (1) estimates of the cost of decommissioning, (2) the method of decommissioning and the timing of the related cash flows, (3) the license period of the nuclear plant, considering the probability of license extensions, (4) cost escalation factors, and (5) the credit adjusted risk free rate to measure the obligation at the present value of the future estimated costs. Decommissioning cost studies will be updated for each of TVA’s nuclear units at least every five years.

Both the nuclear and non-nuclear liabilities were increased by periodic accretion. This was partially offset by ash area settlement projects that were conducted during the six months ended March 31, 2015. The nuclear and non-nuclear accretion were deferred as regulatory assets, and $22 million of the related regulatory assets was amortized into expense as this amount was collected in rates.



Asset Retirement Obligation Activity

	Nuclear		Non-Nuclear			Total
Balance at September 30, 2014	$	2,052	$	1,117		$	3,169
Settlements (ash storage areas)	—		(21		)	(21		)
Accretion (recorded as regulatory asset)	49		26			75
Balance at March 31, 2015	$	2,101	$	1,122		$	3,223		⁽¹	⁾

Note

(1) The current portion of ARO in the amount of $115 million is included in Accounts payable and accrued liabilities at March 31, 2015.