Benefit Plans Benefit Plans (Tables)

12 Months Ended

Sep. 30, 2016

Compensation and Retirement Disclosure [Abstract]

The changes in plan obligations, assets, and funded status for the years ended September 30, 2016 and 2015, were as follows:



Obligations and Funded Status For the years ended September 30
	Pension Benefits						Other Post-Retirement Benefits
	2016			2015			2016			2015
Change in benefit obligation
Benefit obligation at beginning of year	$	12,824		$	12,265		$	657		$	652
Service cost	133			130			16			16
Interest cost	564			540			29			29
Plan participants’ contributions	25			25			—			—
Collections⁽¹⁾	—			—			92			94
Actuarial loss (gain)	1,188			556			68			3
Plan change	(960		)	—			(158		)	—
Net transfers from variable fund/401(k) plan	7			11			—			—
Expenses paid	(6		)	(6		)	—			—
Benefits paid	(692		)	(697		)	(133		)	(137		)
Benefit obligation at end of year	13,083			12,824			571			657

Change in plan assets
Fair value of net plan assets at beginning of year	6,797			7,507			—			—
Actual return on plan assets	733			(325		)	—			—
Plan participants’ contributions	25			25			—			—
Collections⁽¹⁾	—			—			92			94
Net transfers from variable fund/401(k) plan	7			11			—			—
Employer contributions⁽²⁾	281			282			41			43
Expenses paid	(6		)	(6		)	—			—
Benefits paid	(692		)	(697		)	(133		)	(137		)
Fair value of net plan assets at end of year	7,145			6,797			—			—

Funded status	$	(5,938	)	$	(6,027	)	$	(571	)	$	(657	)

Notes

(1) Collections include retiree contributions as well as federal reinsurance payments and provider discounts and rebates.

(2) Other Post-Retirement Benefits Employer contributions are reduced by federal reinsurance payments and provider discounts and rebates.

Amounts Recognized on TVA's Consolidated Balance Sheets

Amounts related to these benefit plans recognized on TVA's consolidated balance sheets consist of regulatory assets that have not been recognized as components of net periodic benefit cost at September 30, 2016 and 2015, and the funded status of TVA’s benefit plans, which are included in Accounts payable and accrued liabilities and Post-retirement and post-employment benefit obligations:



Amounts Recognized on TVA's Consolidated Balance Sheets At September 30
	Pension Benefits						Other Post-Retirement Benefits
	2016			2015			2016			2015
Regulatory assets	$	5,336		$	5,425		$	49		$	140
Accounts payable and accrued liabilities	(5		)	(6		)	(35		)	(37		)
Pension and post-retirement benefit obligations⁽¹⁾	(5,933		)	(6,021		)	(536		)	(620		)

Note

(1) The table above excludes $460 million and $465 million of post-employment benefit costs that are recorded in Post-retirement and post-employment benefit obligations on the Consolidated Balance Sheets at September 30, 2016 and 2015, respectively.

Post-Retirement Benefit Costs Deferred as Regulatory Assets

Unrecognized amounts included in regulatory assets yet to be recognized as components of accrued benefit cost at September 30 consisted of:



Post-Retirement Benefit Costs Deferred as Regulatory Assets At September 30
	Pension Benefits						Other Post-Retirement Benefits
	2016			2015			2016			2015
Unrecognized prior service credit	$	(1,017	)	$	(158	)	$	(185	)	$	(33	)
Unrecognized net loss	5,946			5,355			234			173
Amount capitalized due to actions of regulator	407			228			—			—
Total regulatory assets	$	5,336		$	5,425		$	49		$	140

Projected Benefit Obligations and Accumulated Benefit Obligations in Excess of Plan Assets

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plan at September 30, 2016, and 2015, were as follows:



Projected Benefit Obligations and Accumulated Benefit Obligations in Excess of Plan Assets At September 30
	2016		2015
Projected benefit obligation	$	13,083	$	12,824
Accumulated benefit obligation	12,912		12,626
Fair value of net plan assets	7,145		6,797

Components of Net Periodic Benefit Cost

The components of net periodic benefit cost and other amounts recognized as changes in regulatory assets for the years ended September 30, 2016, and 2015, were as follows:



Components of Net Periodic Benefit Cost For the years ended September 30

	Pension Benefits									Other Post-Retirement Benefits
	2016			2015			2014			2016			2015			2014
Service cost	$	133		$	130		$	130		$	16		$	16		$	18
Interest cost	564			540			558			29			29			32
Expected return on plan assets	(446		)	(437		)	(435		)	—			—			—
Amortization of prior service credit	(23		)	(21		)	(21		)	(6		)	(6		)	(6		)
Recognized net actuarial loss	310			299			285			7			9			11
Curtailment	(78		)	—			—			—			—			—
Total net periodic benefit cost as actuarially determined	460			511			517			46			48			55
Amount capitalized due to actions of regulator	(179		)	(228		)	—			—			—			—
Total net period benefit cost	$	281		$	283		$	517		$	46		$	48		$	55

Expected Amortization of Regulatory Assets in Next Fiscal Year

The amounts in the regulatory asset that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows:



Expected Amortization of Regulatory Assets in 2017 At September 30, 2016
	Pension Benefits			Other Post-Retirement Benefits			Total
Prior service credit	$	(99	)	$	(22	)	$	(121	)
Net actuarial loss	466			13			479

Actuarial Assumptions

TVA’s reported costs of providing the plan benefits are impacted by numerous factors including the provisions of the plans, changing employee demographics, and various assumptions, the most significant of which are noted below.



Actuarial Assumptions
	Pension Benefits				Other Post-Retirement Benefits
	2016		2015		2016		2015
Assumptions utilized to determine benefit obligations at September 30
Discount rate	3.65	%	4.50	%	3.70	%	4.65	%
Rate of compensation increase	5.55	%	5.70	%	N/A		N/A
Pre-Medicare eligible
Initial health care cost trend rate	N/A		N/A		6.50	%	7.00	%
Ultimate health care cost trend rate	N/A		N/A		5.00	%	5.00	%
Ultimate trend rate is reached in year beginning	N/A		N/A		2019		2019
Post-Medicare eligible
Initial health care cost trend rate	N/A		N/A		—	%	7.00	%
Ultimate health care cost trend rate	N/A		N/A		4.00	%	5.00	%
Ultimate trend rate is reached in year beginning	N/A		N/A		2021		2019

Assumptions utilized to determine net periodic benefit cost for the years ended September 30
Discount rate	4.50	%	4.45	%	4.65	%	4.50	%
Expected return on plan assets	7.00	%	7.00	%	N/A		N/A
Rate of compensation increase	5.70	%	5.70	%	N/A		N/A
Pre-Medicare eligible
Initial health care cost trend rate	N/A		N/A		7.00	%	7.50	%
Ultimate health care cost trend rate	N/A		N/A		5.00	%	5.00	%
Ultimate trend rate is reached in year beginning	N/A		N/A		2019		2019
Post-Medicare eligible
Initial health care cost trend rate	N/A		N/A		7.00	%	7.50	%
Ultimate health care cost trend rate	N/A		N/A		5.00	%	5.00	%
Ultimate trend rate is reached in year beginning	N/A		N/A		2019		2019

Sensitivity to Certain Changes in Pension Assumptions

The following chart reflects the sensitivity of pension cost to changes in certain actuarial assumptions:



Sensitivity to Certain Changes in Pension Assumptions At September 30, 2016
Actuarial Assumption	Change in Assumption		Impact on 2016 Pension Cost		Impact on 2016 Projected Benefit Obligation

Discount rate	(0.25	)	$	22	$	388
Rate of return on plan assets	(0.25	)	16		N/A

Sensitivity to Changes in Assumed Health Care Cost Trend Rates

The following chart reflects the sensitivity of post-retirement benefit cost to changes in the health care trend rate:



Sensitivity to Changes in Assumed Health Care Cost Trend Rates At September 30, 2016
	1% Increase		1% Decrease
Effect on total of service and interest cost components for the year	$	6	$	(6	)
Effect on end-of-year accumulated post-retirement benefit obligation	105		(88		)

Asset Holdings and Fair Value Measurements

At September 30, 2016 and 2015, the asset holdings of the system included the following:



Asset Holdings of TVARS At September 30
			Plan Assets at September 30
Asset Category	Target Allocation		2016		2015
Global public equity	39	%	44	%	43	%
Private equity	8	%	4	%	5	%
Safety oriented fixed income	15	%	18	%	19	%
Opportunistic fixed income	15	%	10	%	10	%
Public real assets	15	%	15	%	14	%
Private real assets	8	%	9	%	9	%

Total	100	%	100	%	100	%

Fair Value Measurements

The following table provides the fair value measurement amounts for assets held by TVARS at September 30, 2016:



TVA Retirement System At September 30, 2016
	Total^{(1) (2)}		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Equity securities	$	1,847	$	1,846	$	—	$	1

Preferred securities	20		3		17		—

Debt securities
Corporate debt securities	1,145		—		1,135		10
Residential mortgage-backed securities	181		—		165		16
Debt securities issued by U.S. Treasury and other U.S. government agencies	113		113		—		—
Debt securities issued by foreign governments	332		—		299		33
Asset-backed securities	118		—		87		31
Debt securities issued by state/local governments	16		—		16		—
Commercial mortgage-backed securities	44		—		38		6

Commingled funds measured at net asset value⁽³⁾
Equity	682		—		—		—
Debt	653		—		—		—
Commodities	302		—		—		—
Blended	225		—		—		—

Institutional mutual funds	10		10		—		—
Cash equivalents and other short-term investments	612		41		571		—
Certificates of deposit	16		—		16		—
Private equity measured at net asset value⁽³⁾	385		—		—		—
Private real estate measured at net asset value⁽³⁾	568		—		—		—

Treasury bills, U.S. Government notes, and securities held as futures and other derivative collateral	13		4		9		—

Securities lending commingled funds measured at net asset value ⁽³⁾	3		—		—		—

Derivatives
Futures	2		2		—		—
Swaps	1		—		1		—
Foreign currency forward receivable	5		—		5		—

Total Assets	$	7,293	$	2,019	$	2,359	$	97
Liabilities
Futures	$	2	$	2	$	—	$	—
Foreign currency forward payable	9		—		9		—
Total return swaps	1		—		1		—
Interest rate swaps	3		—		3		—
Credit default swaps	1		—		1		—

Total Liabilities	$	16	$	2	$	14	$	—

Notes

(1) Excludes approximately $129 million in net payables associated with security purchases and sales and various other payables.

(2) Excludes a $3 million payable for collateral on loaned securities in connection with TVARS’s participation in securities lending programs.

(3) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The following table provides the fair value measurement amounts for assets held by TVARS at September 30, 2015:



TVA Retirement System At September 30, 2015
	Total^{(1) (2)}		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Equity securities	$	1,650	$	1,649	$	—	$	1

Preferred securities	36		2		34		—

Debt securities
Corporate debt securities	1,161		—		1,149		12
Residential mortgage-backed securities	151		—		138		13
Debt securities issued by U.S. Treasury and other U.S. government agencies	362		362		—		—
Debt securities issued by foreign governments	294		—		281		13
Asset-backed securities	156		—		116		40
Debt securities issued by state/local governments	25		—		25		—
Commercial mortgage-backed securities	43		—		32		11

Commingled funds measured at net asset value⁽³⁾
Equity	642		—		—		—
Debt	654		—		—		—
Commodities	244		—		—		—
Blended	206		—		—		—

Institutional mutual funds	26		26		—		—
Cash equivalents and other short-term investments	318		—		318		—
Certificates of deposit	6		—		6		—
Private equity measured at net asset value⁽³⁾	389		—		—		—
Private real estate measured at net asset value⁽³⁾	556		—		—		—

Treasury bills, U.S. Government notes, and securities held as futures and other derivative collateral	34		21		13		—

Securities lending commingled funds measured at net asset value⁽³⁾	3		—		—		—

Derivatives
Purchased options	2		—		1		1
Foreign currency forward receivable	6		—		6		—

Total Assets	$	6,964	$	2,060	$	2,119	$	91
Liabilities
Futures	$	17	$	17	$	—	$	—
Foreign currency forward payable	4		—		4		—
Written options	2		—		2		—
Interest rate swaps	10		—		10		—
Credit default swaps	1		—		1		—

Total Liabilities	$	34	$	17	$	17	$	—

Notes

(1) Excludes approximately $130 million in net payables associated with security purchases and sales and various other payables.

(2) Excludes a $3 million payable for collateral on loaned securities in connection with TVARS’s participation in securities lending programs.

(3) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

Fair Value Measurements Using Significant Unobservable Inputs

The following table provides a reconciliation of beginning and ending balances of pension plan assets measured at fair value on a recurring basis where the determination of fair value includes significant unobservable inputs (Level 3):



Fair Value Measurements Using Significant Unobservable Inputs
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Balance at October 1, 2014	$	66
Net realized/unrealized gains (losses)	(2		)
Purchases, sales, issuances, and settlements (net)	33
Transfers in and/or out of Level 3	(6		)

Balance at September 30, 2015	91
Net realized/unrealized gains (losses)	18
Purchases, sales, issuances, and settlements (net)	(12		)
Transfers in and/or out of Level 3	—

Balance at September 30, 2016	$	97

Estimated Future Benefit Payments

The following table sets forth the estimated future benefit payments under the benefit plans.



Estimated Future Benefits Payments At September 30, 2016
	Pension Benefits⁽¹⁾		Other Post-Retirement Benefits
2017	$	770	$	35
2018	771		35
2019	774		33
2020	778		32
2021	780		30
2022 - 2026	$	3,876	$	132

Note

(1) Participants are assumed to receive the Fixed Fund in a lump sum in lieu of available annuity options allowed for certain grandfathered participants resulting in higher estimated pension benefits payments.