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Risk Management Activities and Derivative Transactions Risk Management Activities and Derivative Transactions (Tables) | 12 Months Ended
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Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
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 Gain (Loss) Recognized in Other Comprehensive Income (Loss) For the years ended September 30
Derivatives in Cash Flow Hedging Relationship |  | Objective of Hedge Transaction |  | Accounting for Derivative Hedging Instrument |  | 2016 |  | 2015
Currency swaps |  | To protect against changes in cash flows caused by changes in foreign currency exchange rates (exchange rate risk) |  | Unrealized gains and losses are recorded in AOCI and reclassified to interest expense to the extent they are offset by gains and losses on the hedged transaction |  | $ | (139 | ) |  | $ | (72 | )
Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2) Amount of Gain (Loss) Reclassified from OCI to Interest Expense For the years ended September 30
Derivatives in Cash Flow Hedging Relationship |  | 2016 |  | 2015
Currency swaps |  | $ | (129 | ) |  | $ | (65 | )
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 $19 million of gains 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(1) For the years ended September 30
Derivative Type |  | Objective of Derivative |  | Accounting for Derivative Instrument |  | 2016 |  | 2015
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. Realized gains and losses are recognized in interest expense when payments are made or received on the swap settlement dates. |  | $ | (109 | ) |  | $ | (114 | )
Commodity derivatives under 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. |  | (94 | ) |  | (98 | )
Notes (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 years ended September 30, 2016 and 2015.
Fair Values of TVA Derivatives |
Fair Values of TVA Derivatives At September 30
| 2016 |  | 2015
Derivatives That Receive Hedge Accounting Treatment:
| Balance |  | Balance Sheet Presentation |  | Balance |  | Balance Sheet Presentation
Currency swaps |  |  |  |  |  |  |
£200 million Sterling | $ | (82 | ) |  | Other long-term liabilities |  | $ | (41 | ) |  | Other long-term liabilities
£250 million Sterling | (41 | ) |  | Other long-term liabilities |  | 25 |  |  | Other long-term assets
£150 million Sterling | (39 | ) |  | Other long-term liabilities |  | (6 | ) |  | 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 | $ | (1,387 | ) |  | Other long-term liabilities |  | $ | (1,177 | ) |  | Other long-term liabilities
$476 million notional | (539 | ) |  | Other long-term liabilities |  | (438 | ) |  | Other long-term liabilities
$42 million notional | (12 | ) |  | Other long-term liabilities |  | (12 | ) |  | Other long-term liabilities
Commodity contract derivatives | (125 | ) |  | Other current assets $6; Other long-term assets $3; Other long-term liabilities $(49); Accounts payable and accrued liabilities $(85) |  | (97 | ) |  | Other long-term assets $1; Other long-term liabilities $(17); Accounts payable and accrued liabilities $(81)
FTP |  |  |  |  |  |  |
Derivatives under FTP(1) | (39 | ) |  | Other current assets $(30); Other long-term liabilities $(2); Accounts payable and accrued liabilities $(7) |  | (116 | ) |  | Other current assets $(89); Other long-term liabilities $(10); Accounts payable and accrued liabilities $(17)
Note (1) Fair values of certain derivatives under the FTP that were in net liability positions totaling $30 million and $89 million at September 30, 2016 and September 30, 2015, 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 futures commission merchant to offset the net liability positions in full.
Currency Swaps Outstanding | TVA had the following currency swaps outstanding at September 30, 2016:
Currency Swaps Outstanding At September 30, 2016
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 September 30
| 2016 |  | 2015
| Number of Contracts |  | Notional Amount |  | Fair Value (MtM) |  | Number of Contracts |  | Notional Amount |  | Fair Value (MtM)
Coal contract derivatives | 20 |  | 20 million tons |  | $ | (127 | ) |  | 14 |  | 19 million tons |  | $ | (98 | )
Natural gas contract derivatives | 39 |  | 148 million mmBtu |  | $ | 2 |  |  | 33 |  | 134 million mmBtu |  | $ | 1 |
Derivatives Under Financial Trading Program |
Derivatives under Financial Trading Program At September 30
| 2016 |  | 2015
| Notional Amount |  | Fair Value (MtM) (in millions) |  | Notional Amount |  | Fair Value (MtM) (in millions)
Natural gas (in mmBtu) |  |  |  |  |  |  |
Swap contracts | 21,052,500 |  |  | $ | (39 | ) |  | 51,495,000 |  |  | $ | (116 | )
Note Fair value amounts presented are based on the net commodity position with the counterparty. Notional amounts disclosed represent the net value of contractual amounts.
Financial Trading Program Unrealized Gains (Losses) |
Financial Trading Program Unrealized Gains (Losses) At September 30
FTP unrealized gains (losses) deferred as regulatory liabilities (assets) |  | 2016 |  | 2015
Natural gas |  | $ | (39 | ) |  | $ | (116 | )
Financial Trading Program Realized Gains (Losses) |
Financial Trading Program Realized Gains (Losses) For the years ended September 30
Decrease (increase) in fuel expense |  | 2016 |  | 2015
Natural gas |  | $ | (75 | ) |  | $ | (79 | )
Fuel oil/crude oil |  | — |  |  | 1 |
Financial Trading Program Realized Gains (Losses) For the years ended September 30
Decrease (increase) in purchased power expense |  | 2016 |  | 2015
Natural gas |  | $ | (19 | ) |  | $ | (20 | )
Offsetting Assets and Liabilities | The amounts of TVA's derivative instruments as reported in the Consolidated Balance Sheets as of September 30, 2016, and September 30, 2015, are shown in the table below.
| As of September 30, 2016
| 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 |  |  |  |  |
Commodity derivatives under FTP | $ | 6 |  |  | $ | (6 | ) |  | $ | — |
Total derivatives subject to master netting or similar arrangement | 6 |  |  | (6 | ) |  | — |
Total derivatives not subject to master netting or similar arrangement | 9 |  |  | — |  |  | 9 |
Total | $ | 15 |  |  | $ | (6 | ) |  | $ | 9 |
Liabilities |  |  |  |  |
Currency swap(s) (3) | $ | 162 |  |  | $ | — |  |  | $ | 162 |
Interest rate swaps (3) | 1,938 |  |  | — |  |  | 1,938 |
Commodity derivatives under FTP | 45 |  |  | (36 | ) |  | 9 |
Total derivatives subject to master netting or similar arrangement | 2,145 |  |  | (36 | ) |  | 2,109 |
Total derivatives not subject to master netting or similar arrangement | 134 |  |  | — |  |  | 134 |
Total | $ | 2,279 |  |  | $ | (36 | ) |  | $ | 2,243 |
| As of September 30, 2015
| 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 swap(s) (3) | $ | 25 |  |  | $ | — |  |  | $ | 25 |
Commodity derivatives under FTP | 49 |  |  | (49 | ) |  | — |
Total derivatives subject to master netting or similar arrangement | 74 |  |  | (49 | ) |  | 25 |
Total derivatives not subject to master netting or similar arrangement | 1 |  |  | — |  |  | 1 |
Total | $ | 75 |  |  | $ | (49 | ) |  | $ | 26 |
Liabilities |  |  |  |  |
Currency swap(s) (3) | $ | 47 |  |  | $ | — |  |  | $ | 47 |
Interest rate swaps (3) | 1,627 |  |  | — |  |  | 1,627 |
Commodity derivatives under FTP | 165 |  |  | (138 | ) |  | 27 |
Total derivatives subject to master netting or similar arrangement | 1,839 |  |  | (138 | ) |  | 1,701 |
Total derivatives not subject to master netting or similar arrangement | 98 |  |  | — |  |  | 98 |
Total | $ | 1,937 |  |  | $ | (138 | ) |  | $ | 1,799 |
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 $1.4 billion and $1.1 billion were posted as collateral at September 30, 2016 and September 30, 2015, respectively, to partially secure the liability positions of one of the currency swaps and one of the interest rate swaps in accordance with the collateral requirements for these derivatives. At September 30, 2016, TVA held no cash collateral in excess of collateral requirements. At September 30, 2015, TVA held $15 million of cash collateral in excess of collateral requirements. Cash collateral held in excess of collateral requirements is recorded in Restricted cash and investments with a corresponding obligation of the same amount recorded in Accounts payable and accrued liabilities.

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