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Risk Management Activities and Derivative Transactions Risk Management Activities and Derivative Transactions (Tables)
 12 Months Ended
Sep. 30, 2019
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 Accumulated 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
 
2019
 
2018
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
 
$
(114
)
 
$
10


Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2)(1)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income to Interest Expense
For the years ended September 30
Derivatives in Cash Flow Hedging Relationship
 
2019
 
2018
Currency swaps
 
$
(45
)
 
$
(26
)
Note
(1) 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 $30 million of gains from AOCI to interest expense within the next 12 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
 
2019
 
2018
Interest rate swaps
 
To fix short-term debt variable rate to a fixed rate (interest rate risk)
 
Mark-to-Market gains and losses are recorded as regulatory assets or liabilities

Realized gains and losses are recognized in interest expense when incurred during the settlement period
 
$
(79
)
 
$
(89
)
 
 
 
 
 
 
 
 
 
Commodity derivatives
under FTP
 
To protect against fluctuations in market prices of purchased commodities (price risk)
 
Mark-to-Market 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
 
—

 
(8
)

Note
(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 were no related gains (losses) recognized in income for these unrealized gains (losses) for the years ended September 30, 2019 and 2018.
Fair Values of TVA Derivatives
At September 30
 
2019
 
2018
Derivatives That Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Currency swaps
 
 
 
 
 
 
 
£200 million Sterling
$
(90
)
 
Accounts payable and accrued liabilities $(6); Other long-term liabilities $(84)
 
$
(67
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(62)
£250 million Sterling
(61
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(56)
 
(12
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(7)
£150 million Sterling
(57
)
 
Accounts payable and accrued liabilities $(4); Other long-term liabilities $(53)
 
(15
)
 
Accounts payable and accrued liabilities $(3); Other long-term liabilities $(12)
 
 
 
 
 
 
 
 
Derivatives That Do Not Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Interest rate swaps
 
 
 
 
 
 
 
$1.0 billion notional
$
(1,261
)
 
Accounts payable and accrued liabilities $(62); Other long-term liabilities $(1,199)
 
$
(878
)
 
Accounts payable and
accrued liabilities $(56);
Other long-term liabilities
$(822)
$476 million notional
(498
)
 
Accounts payable and accrued liabilities $(24); Other long-term liabilities $(474)
 
(317
)
 
Accounts payable and
accrued liabilities $(20);
Other long-term liabilities
$(297)
$42 million notional
(5
)
 
Accounts payable and accrued liabilities $(2); Other long-term liabilities $(3)
 
(4
)
 
Accounts payable and
accrued liabilities $(1); Other long-term liabilities $(3)
Commodity contract derivatives
(41
)
 
Other current assets $12; Other long-term liabilities $(16); Accounts payable and accrued liabilities $(37)
 
60

 
Other current assets $41; Other long-term assets $31; Other long-term liabilities $(8); Accounts payable and accrued liabilities $(4)
Fair Values of TVA Derivatives
Fair Values of TVA Derivatives
At September 30
 
2019
 
2018
Derivatives That Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Currency swaps
 
 
 
 
 
 
 
£200 million Sterling
$
(90
)
 
Accounts payable and accrued liabilities $(6); Other long-term liabilities $(84)
 
$
(67
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(62)
£250 million Sterling
(61
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(56)
 
(12
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(7)
£150 million Sterling
(57
)
 
Accounts payable and accrued liabilities $(4); Other long-term liabilities $(53)
 
(15
)
 
Accounts payable and accrued liabilities $(3); Other long-term liabilities $(12)
 
 
 
 
 
 
 
 
Derivatives That Do Not Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Interest rate swaps
 
 
 
 
 
 
 
$1.0 billion notional
$
(1,261
)
 
Accounts payable and accrued liabilities $(62); Other long-term liabilities $(1,199)
 
$
(878
)
 
Accounts payable and
accrued liabilities $(56);
Other long-term liabilities
$(822)
$476 million notional
(498
)
 
Accounts payable and accrued liabilities $(24); Other long-term liabilities $(474)
 
(317
)
 
Accounts payable and
accrued liabilities $(20);
Other long-term liabilities
$(297)
$42 million notional
(5
)
 
Accounts payable and accrued liabilities $(2); Other long-term liabilities $(3)
 
(4
)
 
Accounts payable and
accrued liabilities $(1); Other long-term liabilities $(3)
Commodity contract derivatives
(41
)
 
Other current assets $12; Other long-term liabilities $(16); Accounts payable and accrued liabilities $(37)
 
60

 
Other current assets $41; Other long-term assets $31; Other long-term liabilities $(8); Accounts payable and accrued liabilities $(4)
Currency Swaps Outstanding
TVA had the following currency swaps outstanding at September 30, 2019:
Currency Swaps Outstanding
At September 30, 2019
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
 
2019
 
2018
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
Coal contract derivatives
8
 
9 million tons
 
$
(4
)
 
13
 
20 million tons
 
$
58

Natural gas contract derivatives
65
 
330 million mmBtu
 
$
(37
)
 
61
 
359 million mmBtu
 
$
2
Financial Trading Program Realized Gains (Losses)
TVA experienced the following realized losses related to the FTP during the periods set forth in the table below:
Financial Trading Program Realized Gains (Losses)
For the years ended September 30
Decrease (increase) in fuel expense
 
2019
 
2018
Natural gas
 
$
—

 
$
(6
)

Decrease (increase) in purchased power expense
 
 
 
 
Natural gas
 
$
—

 
$
(2
)
Offsetting Assets and Liabilities
The amounts of TVA's derivative instruments as reported on the Consolidated Balance Sheets at September 30, 2019 and 2018, are shown in the table below.
Derivative Assets and Liabilities
 
At September 30, 2019
 
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 not subject to master netting or similar arrangement
$
12

 
$
—

 
$
12

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Currency swaps(3)
$
208

 
$
—

 
$
208

Interest rate swaps(3)
1,764

 
—

 
1,764

Total derivatives subject to master netting or similar arrangement
1,972

 
—

 
1,972

Commodity derivatives not subject to master netting or similar arrangement
53

 
—

 
53

Total liabilities
$
2,025

 
$
—

 
$
2,025

 
 
 
 
 
 
 
At September 30, 2018
 
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 not subject to master netting or similar arrangement
$
72

 
$
—

 
$
72

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Currency swaps(3)
$
94

 
$
—

 
$
94

Interest rate swaps(3)
1,199

 
—

 
1,199

Total derivatives subject to master netting or similar arrangement
1,293

 
—

 
1,293

Commodity derivatives not subject to master netting or similar arrangement
12

 
—

 
12

Total liabilities
$
1,305

 
$
—

 
$
1,305

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 that are not offset on the Consolidated Balance Sheets.
(3) Letters of credit of approximately $1.3 billion and $921 million were posted as collateral at September 30, 2019 and 2018, 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.