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Business Combinations and Settlement of Preexisting Relationships (Notes)
 12 Months Ended
Sep. 30, 2016
Business Combinations and Settlement of Preexisting Relationships [Abstract]  
Business Combination Disclosure
Business Combinations and Settlement of Preexisting Relationships

On July 20, 2016, TVA acquired 100 percent of the equity interests in Johnsonville Generation, LLC and Gallatin Generation, LLC, two special purpose entities ("SPEs") designed to administer rent payments TVA makes under certain of its lease/leaseback arrangements. The SPEs also each hold residual interests in four of TVA's peaking combustion turbine units. TVA acquired these businesses in order to exercise its rights of first refusal under certain of its lease/leaseback arrangements and to reacquire the residual interests in eight combustion turbine units it had previously granted in the lease/leaseback arrangements.

TVA acquired the entities for total cash consideration of $33 million. The fair value of the assets acquired consisted of $111 million of reacquired rights and the fair value of liabilities assumed consisted of $78 million in notes payable. Reacquired rights are an intangible asset included in TVA's completed plant balance and are amortized over the estimated useful life of the underlying combustion turbine units. Notes payable assumed in the transaction are included in TVA's long-term debt and are subject to semi-annual payments through March 2019. The entities acquired by TVA had $1 million of amortization expense, related to reacquired rights, and this expense is included within TVA’s consolidated statements of operations. Transaction costs were expensed as incurred and were not material.

TVA determined that its lease/leaseback obligations were preexisting relationships that were effectively settled in the business combinations. TVA settled the preexisting relationships separately from the business combinations, resulting in a loss on extinguishment of the obligations of $6 million. The carrying value of lease/leaseback obligations effectively settled was $72 million, including accrued interest, and the reacquisition price was $78 million, paid in cash, at the acquisition date.