Other Long-Term Liabilities

12 Months Ended

Sep. 30, 2020

Other Liabilities, Noncurrent [Abstract]

Other long-term liabilities consist primarily of liabilities related to certain derivative agreements as well as for environmental remediation liabilities and liabilities under agreements related to compliance with certain environmental regulations. See Note 12 — Asset Retirement Obligations, Note 15 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Interest Rate Derivatives, and Note 22 — Commitments and Contingencies — Legal Proceedings — Environmental Agreements. The table below summarizes the types and amounts of Other long-term liabilities:


Other Long-Term Liabilities(1) At September 30
	2020		2019
Interest rate swap liabilities	$	1,927	$	1,676

Operating lease liabilities	171		—
Currency swap liabilities	123		193
EnergyRight® financing obligation	78		90
Paradise pipeline financing obligation	—		80
Accrued long-term service agreements	56		66


Other	193		203
Total other long-term liabilities	$	2,548	$	2,308

Note

(1) Due to the implementation of the new lease accounting standard effective October 1, 2019, TVA reclassified $182 million of finance leases from Other long-term liabilities to Finance lease liabilities in the Consolidated Balance Sheet for the year ending September 30, 2019.

Interest Rate Swap Liabilities. TVA uses interest rate swaps to fix variable short-term debt to a fixed rate. The values of these derivatives are included in Accounts payable and accrued liabilities, Accrued interest, and Other long-term liabilities on the Consolidated Balance Sheets. As of September 30, 2020 and 2019, the carrying amount of the interest rate swap liabilities reported in Accounts payable and accrued liabilities and Accrued interest was approximately $114 million and $88 million, respectively. See Note 15 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Interest Rate Derivatives for information regarding the interest rate swap liabilities. As of September 30, 2020, Interest rate swap liabilities increased $277 million as compared to September 30, 2019, primarily due to a decrease in interest rates resulting in higher mark-to-market values on future expected net cash flows.

EnergyRight® Financing Obligation. TVA purchases certain loans receivable from its LPCs in association with the EnergyRight® program. The current and long-term portions of the resulting financing obligation are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheets. As of September 30, 2020 and 2019, the carrying amount of the financing obligation reported in Accounts payable and accrued liabilities was approximately $19 million and $23 million, respectively. See Note 8 — Other Long-Term Assets for information regarding the associated loans receivable.

In response to the COVID-19 pandemic, customers experiencing financial hardship can request a deferral of EnergyRight® loan payments for a period of up to six months. This deferral option began April 20, 2020, and is available through October 31, 2020. Deferred loans will not accrue interest during the deferral months. These deferred loans have resulted in a less than $1 million impact to TVA.

Paradise Pipeline Financing Obligation. TVA reserves firm pipeline capacity on an approximately 19-mile pipeline

owned by Texas Gas, which serves TVA's Paradise Combined Cycle Facility. TVA had been accounting for the contract covering this arrangement as a financing transaction due to failed sale-leaseback treatment. The contract was revised during the fourth quarter of 2020 and is no longer deemed to contain a lease component. Accordingly, amounts related to the pipeline asset and financing obligation recorded in connection with this transaction were derecognized as of September 30, 2020. The current and long-term portions of less than $1 million and $80 million, respectively, of the financing obligation are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheet at September 30, 2019.

Accrued Long-Term Service Agreement. TVA has entered into various long-term service agreements for major

maintenance activities at certain of its combined cycle plants. TVA uses the direct expense method of accounting for these

arrangements. TVA accrues for parts when it takes ownership and for contractor services when they are rendered. Under

certain of these agreements, parts received and services rendered exceed payments made. The current and long-term portions

of the resulting obligation are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on

TVA's Consolidated Balance Sheets. As of September 30, 2020 and 2019, related liabilities of $15 million and $12 million, respectively, were recorded in Accounts payable and accrued liabilities.