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Benefit Plans Benefit Plans (Tables)
 12 Months Ended
Sep. 30, 2018
Retirement Benefits [Abstract]  
Obligations and Funded Status
The changes in plan obligations, assets, and funded status for the years ended September 30, 2018 and 2017, were as follows:
Obligations and Funded Status
For the years ended September 30
 
Pension Benefits
 
Other Post-Retirement Benefits
 
2018
 
2017
 
2018
 
2017
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
12,601

 
$
13,083

 
$
494

 
$
571

Service cost
53

 
60

 
14

 
18

Interest cost
473

 
464

 
19

 
21

Plan participants’ contributions
7

 
9

 
—

 
—

Collections(1)
—

 
—

 
25

 
47

Actuarial (gain) loss
(658
)
 
(286
)
 
(46
)
 
(80
)
Plan change
—

 
—

 
(17
)
 
—

Net transfers (to) from variable fund/401(k) plan(2)
(26
)
 
(12
)
 
—

 
—

Expenses paid
(6
)
 
(5
)
 
—

 
—

Benefits paid
(719
)
 
(712
)
 
(61
)
 
(83
)
Benefit obligation at end of year
11,725

 
12,601

 
428

 
494

 
 
 
 
 
 
 
 
Change in plan assets
 

 
 

 
 

 
 

Fair value of net plan assets at beginning of year
7,989

 
7,145

 
—

 
—

Actual return on plan assets
454

 
759

 
—

 
—

Plan participants’ contributions
7

 
9

 
—

 
—

Collections(1)
—

 
—

 
25

 
47

Net transfers (to) from variable fund/401(k) plan(2)
(26
)
 
(12
)
 
—

 
—

Employer contributions(3)
304

 
805

 
36

 
36

Expenses paid
(6
)
 
(5
)
 
—

 
—

Benefits paid
(719
)
 
(712
)
 
(61
)
 
(83
)
Fair value of net plan assets at end of year
8,003

 
7,989

 
—

 
—

Funded status
$
(3,722
)
 
$
(4,612
)
 
$
(428
)
 
$
(494
)

Notes
(1) Collections include retiree contributions as well as provider discounts and rebates.
(2) Includes one-time transfers to the 401(k) of $23 million related to the 2018 plan amendment.
(3) Other Post-Retirement Benefits Employer contributions are reduced by 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, 2018 and 2017, 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
 
2018
 
2017
 
2018
 
2017
Regulatory assets (liabilities)
$
3,119

 
$
4,009

 
$
(73
)
 
$
(23
)
Accounts payable and accrued liabilities
(6
)
 
(4
)
 
(28
)
 
(33
)
Pension and post-retirement benefit obligations(1)
(3,716
)
 
(4,608
)
 
(400
)
 
(461
)

Note
(1) The table above excludes $360 million and $408 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, 2018 and 2017, respectively.
Post-Retirement Benefit Costs Deferred as Regulatory Assets
Unrecognized amounts included in regulatory assets or liabilities yet to be recognized as components of accrued benefit cost at September 30, 2018 and 2017, consisted of the following:
Post-Retirement Benefit Costs Deferred as Regulatory Assets
At September 30
 
Pension Benefits
 
Other Post-Retirement Benefits
 
2018
 
2017
 
2018
 
2017
Unrecognized prior service credit
$
(819
)
 
$
(918
)
 
$
(159
)
 
$
(163
)
Unrecognized net loss
3,842

 
4,885

 
86

 
140

Amount capitalized due to actions of regulator
96

 
42

 
—

 
—

Total regulatory assets
$
3,119

 
$
4,009

 
$
(73
)
 
$
(23
)
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, 2018 and 2017, were as follows:
Projected Benefit Obligations and Accumulated Benefit Obligations in Excess of Plan Assets
At September 30
 
2018
 
2017
Projected benefit obligation
$
11,725

 
$
12,601

Accumulated benefit obligation
11,659

 
12,461

Fair value of net plan assets
8,003

 
7,989
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, 2018 and 2017, were as follows:
Components of Net Periodic Benefit Cost
For the years ended September 30
 
Pension Benefits
 
Other Post-Retirement Benefits
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Service cost
$
53

 
$
60

 
$
133

 
$
14

 
$
18

 
$
16

Interest cost
473

 
464

 
564

 
19

 
21

 
29

Expected return on plan assets
(478
)
 
(457
)
 
(446
)
 
—

 
—

 
—

Amortization of prior service credit
(99
)
 
(99
)
 
(23
)
 
(22
)
 
(22
)
 
(6
)
Recognized net actuarial loss
409

 
472

 
310

 
8

 
14

 
7

Curtailment
—

 
—

 
(78
)
 
—

 
—

 
—

Total net periodic benefit cost as actuarially determined
358

 
440

 
460

 
19

 
31

 
46

Amount expensed (capitalized) due to actions of regulator
(54
)
 
365

 
(179
)
 
—

 
—

 
—

Change in net periodic benefit cost
$
304

 
$
805

 
$
281

 
$
19

 
$
31

 
$
46
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 2019
At September 30, 2018
 
Pension Benefits
 
Other Post-Retirement
Benefits
 
Total
Prior service credit
$
(99
)
 
$
(24
)
 
$
(123
)
Net actuarial loss
327

 
4

 
331
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 Utilized to Determine Benefit Obligations at September 30
 
Pension Benefits
 
Other Post-Retirement Benefits
 
2018
 
2017
 
2018
 
2017
Discount rate
4.35
%
 
3.85
%
 
4.40
%
 
3.95
%
Rate of compensation increase
3.60
%
 
5.43
%
 
N/A

 
N/A

Cost of living adjustment (COLA)(1)
2.00
%
 
2.00
%
 
2.00
%
 
2.00
%
Pre-Medicare eligible
 
 
 
 
 
 
 
Initial health care cost trend rate
N/A

 
N/A

 
6.25
%
 
6.50
%
Ultimate health care cost trend rate
N/A

 
N/A

 
5.00
%
 
5.00
%
Year ultimate trend rate is reached
N/A

 
N/A

 
2024

 
2024

Post-Medicare eligible
 
 
 
 
 
 
 
Initial health care cost trend rate
N/A

 
N/A

 
—
%
 
—
%
Ultimate health care cost trend rate
N/A

 
N/A

 
4.00
%
 
4.00
%
Year ultimate trend rate is reached
N/A

 
N/A

 
2021

 
2021


Note
(1) The COLA rate is the ultimate long-term rate.
Actuarial Assumptions Utilized to Determine Net Periodic Benefit Cost for the Years Ended September 30(1)
 
Pension Benefits
 
Other Post-Retirement Benefits
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Discount rate
3.85
%
 
3.65
%
 
4.50
%
 
3.95
%
 
3.70
%
 
4.65
%
Expected return on plan assets
6.75
%
 
7.00
%
 
7.00
%
 
N/A

 
N/A

 
N/A

Cost of living adjustment (COLA)(2)
2.00
%
 
2.00
%
 
2.40
%
 
2.00
%
 
2.00
%
 
2.40
%
Rate of compensation increase
5.34
%
 
5.43
%
 
5.55
%
 
N/A

 
N/A

 
N/A

Pre-Medicare eligible
 
 
 
 
 
 
 
 
 
 
 
Initial health care cost trend rate
N/A

 
N/A

 
N/A

 
6.50
%
 
6.50
%
 
7.00
%
Ultimate health care cost trend rate
N/A

 
N/A

 
N/A

 
5.00
%
 
5.00
%
 
5.00
%
Year ultimate trend rate is reached
N/A

 
N/A

 
N/A

 
2024

 
2019

 
2019

Post-Medicare eligible
 
 
 
 
 
 
 
 
 
 
 
Initial health care cost trend rate
N/A

 
N/A

 
N/A

 
—
%
 
—
%
 
7.00
%
Ultimate health care cost trend rate
N/A

 
N/A

 
N/A

 
4.00
%
 
4.00
%
 
5.00
%
Year ultimate trend rate is reached
N/A

 
N/A

 
N/A

 
2021

 
2021

 
2019

Notes
(1) The actuarial assumptions used to determine the benefit obligations at September 30 of each year are subsequently used to determine net periodic benefit cost for the following year
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, 2018
 
 
Actuarial Assumption
 
Change in Assumption
 
Impact on 2018 Pension Cost
 
Impact on 2018 Projected Benefit Obligation
Discount rate
 
(0.25
)%
 
$
16

 
$
330

Rate of return on plan assets
 
(0.25
)%
 
18

 
N/A

Cost of living adjustments
 
0.25
 %
 
28

 
217
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, 2018
 
1% Increase
 
1% Decrease
Effect on total of service and interest cost components for the year
$
4

 
$
(4
)
Effect on end-of-year accumulated post-retirement benefit obligation
62

 
(59
)
Asset Holdings and Fair Value Measurements
s consistent with the asset allocation policy. At September 30, 2018 and 2017, the asset holdings of TVARS included the following:
Asset Holdings of TVARS
At September 30
 
 
 
 
Plan Assets at September 30
Asset Category
 
Target Allocation
 
2018
 
2017
Global public equity
 
35
%
 
44
%
 
44
%
Private equity
 
8
%
 
7
%
 
5
%
Safety oriented fixed income
 
17
%
 
16
%
 
21
%
Opportunistic fixed income
 
15
%
 
10
%
 
10
%
Public real assets
 
15
%
 
15
%
 
13
%
Private real assets
 
10
%
 
8
%
 
7
%
Total
 
100
%
 
100
%
 
100
%


Fair Value Measurements

The following table provides the fair value measurement amounts for assets held by TVARS at September 30, 2018:
TVA Retirement System
At September 30, 2018
 
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
$
1,787

 
$
1,786

 
$
—

 
$
1

 


 
 
 
 
 
 
Preferred securities
10

 
4

 
6

 
—

 
 
 
 
 
 
 
 
Debt securities
 
 
 

 
 

 
 

Corporate debt securities
1,151

 
—

 
1,148

 
3

Residential mortgage-backed securities
377

 
—

 
371

 
6

    Debt securities issued by U.S. Treasury
696

 
696

 
—

 
—

Debt securities issued by foreign governments
322

 
—

 
304

 
18

Asset-backed securities
129

 
—

 
103

 
26

Debt securities issued by state/local governments
17

 
—

 
17

 
—

Commercial mortgage-backed securities
74

 
—

 
70

 
4

 
 
 
 
 
 
 
 
Commingled funds measured at net asset value(3)


 
 
 
 
 
 
Equity
1,175

 
—

 
—

 
—

Debt
317

 
—

 
—

 
—

Commodities
232

 
—

 
—

 
—

Blended
109

 
—

 
—

 
—

 
 
 
 
 
 
 
 
Institutional mutual funds
109

 
109

 
—

 
—

Cash equivalents and other short-term investments
358

 
42

 
316

 
—

Certificates of deposit
2

 
—

 
2

 
—

Private credit measured at net asset value(3)
8

 
—

 
—

 
—

Private equity measured at net asset value(3)
631

 
—

 
—

 
—

Private real estate measured at net asset value(3)
583

 
—

 
—

 
—

 
 
 
 
 
 
 
 
Securities lending collateral
318

 
—

 
318

 
—

 
 
 
 
 
 
 
 
Derivatives
 

 
 

 
 

 
 

Futures
7

 
7

 
—

 
—

Swaps
8

 
—

 
8

 
—

Foreign currency forward receivable
3

 
—

 
3

 
—

 
 
 
 
 
 
 
 
Total assets
$
8,423

 
$
2,644

 
$
2,666

 
$
58

 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 

 
 

Futures
$
3

 
$
3

 
$
—

 
$
—

Foreign currency forward payable
3

 
—

 
3

 
—

Written options
1

 
—

 
1

 
—

 
 
 
 
 
 
 
 
Total liabilities
$
7

 
$
3

 
$
4

 
$
—

Notes
(1) Excludes approximately $95 million in net payables associated with security purchases and sales and various other payables.
(2) Excludes a $318 million payable for collateral on loaned securities in connection with TVARS’s participation in securities lending programs.
(3) In accordance with Subtopic 820-10, 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, 2017:
TVA Retirement System
At September 30, 2017
 
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
$
1,771

 
$
1,770

 
$
—

 
$
1

 

 
 
 
 
 
 
Preferred securities
14

 
3

 
11

 
—

 
 
 
 
 
 
 
 
Debt securities
 
 
 

 
 

 
 

Corporate debt securities
1,100

 
—

 
1,088

 
12

Residential mortgage-backed securities
325

 
—

 
317

 
8

Debt securities issued by U.S. Treasury
193

 
193

 
—

 
—

Debt securities issued by foreign governments
331

 
—

 
307

 
24

Asset-backed securities
146

 
—

 
109

 
37

Debt securities issued by state/local governments
19

 
—

 
17

 
2

Commercial mortgage-backed securities
68

 
—

 
62

 
6

 
 
 
 
 
 
 
 
Commingled funds measured at net asset value(3)


 
 
 
 
 
 
Equity
1,134

 
—

 
—

 
—

Debt
709

 
—

 
—

 
—

Commodities
224

 
—

 
—

 
—

 


 


 


 


Institutional mutual funds
155

 
155

 
—

 
—

Cash equivalents and other short-term investments
916

 
—

 
916

 
—

Certificates of deposit
6

 
—

 
6

 
—

Private equity measured at net asset value(3)
500

 
—

 
—

 
—

Private real estate measured at net asset value(3)
533

 
—

 
—

 
—

 


 


 


 


Securities lending collateral
369

 
—

 
369

 
—

 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
Futures
18

 
18

 
—

 
—

Swaps
1

 
—

 
1

 
—

Foreign currency forward receivable
4

 
—

 
4

 
—

 
 
 
 
 
 
 
 
Total assets
$
8,536

 
$
2,139

 
$
3,207

 
$
90

 
 
 
 
 
 
 
 
Liabilities
 

 
 

 
 

 
 

Futures
$
3

 
$
2

 
$
—

 
$
1

Foreign currency forward payable
6

 
—

 
6

 
—

Swaps
1

 
—

 
—

 
1

 
 
 
 
 
 
 
 
Total liabilities
$
10

 
$
2

 
$
6

 
$
2

Notes
(1) Excludes approximately $168 million in net payables associated with security purchases and sales and various other payables.
(2) Excludes a $369 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, 2016
$
97

Net realized/unrealized gains (losses)
2

Purchases, sales, issuances, and settlements (net)
(6
)
Transfers in and/or out of Level 3
(5
)
Balance at September 30, 2017
88

Net realized/unrealized gains (losses)
(4
)
Purchases, sales, issuances, and settlements (net)
(23
)
Transfers in and/or out of Level 3
(3
)
Balance at September 30, 2018
$
58
Estimated Future Benefit Payments
Cash Flows

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, 2018
 
Pension
Benefits(1)
 
Other Post-Retirement Benefits
2019
$
779

 
$
29

2020
776

 
27

2021
772

 
25

2022
771

 
24

2023
768

 
23

2024 - 2028
3,771

 
109

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.
Amounts recognized on Consolidated Balance Sheets
Amounts related to other post-employment benefit obligations are recognized on TVA's consolidated balance sheets. The current portion which represents unpaid losses and administrative fees due are in Accounts payable and accrued liabilities. The long-term portion is recognized in Post-retirement and post-employment benefit obligations.
Amounts Recognized on TVA's Consolidated Balance Sheets
At September 30
 
2018
 
2017
Accounts payable and accrued liabilities
$
39

 
$
39

Post-retirement and post-employment benefit obligations
360

 
408