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Risk Management Activities and Derivative Transactions (Tables)
 3 Months Ended
Dec. 31, 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)
 
 
 
 
 
 
Three Months Ended
December 31
 
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
 
$
76

 
$
(52
)
 

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
 
 
Three Months Ended
December 31
 
Derivatives in Cash Flow Hedging Relationship
 
2019
 
2018
 
Currency swaps
 
$
59

 
$
(18
)
 
Note
(1) There were no amounts excluded from effectiveness testing for any of the periods presented. Based on forecasted foreign currency exchange rates, TVA expects to reclassify approximately $15 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)





 
Three Months Ended December 31
 
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 and are presented in operating cash flow
 
$
(21
)
 
$
(20
)
 
 
 
 
 
 
 
 
 
 
 
Commodity contract derivatives
 
To protect against fluctuations in market prices of purchased coal or natural gas (price risk)
 
Mark-to-market gains and losses are recorded as regulatory assets or liabilities

Realized gains and losses due to contract settlements are recognized in fuel expense as incurred
 
1

 
—

 
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 three months ended December 31, 2019 and 2018.
Fair Value of TVA Derivatives
Fair Values of TVA Derivatives
 
At December 31, 2019
 
At September 30, 2019
Derivatives That Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Currency swaps
 
 
 
 
 
 
 
£200 million Sterling
$
(69
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(64)
 
$
(90
)
 
Accounts payable and
accrued liabilities $(6); Other long-term liabilities $(84)
£250 million Sterling
(27
)
 
Accounts payable and accrued liabilities $(4); Other long-term liabilities $(23)
 
(61
)
 
Accounts payable and accrued liabilities $(5); Other long-term liabilities $(56)
£150 million Sterling
(36
)
 
Accounts payable and accrued liabilities $(3); Other long-term liabilities $(33)
 
(57
)
 
Accounts payable and
accrued liabilities $(4); Other long-term liabilities $(53)
 
 
 
 
 
 
 
 
Derivatives That Do Not Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Interest rate swaps
 
 
 
 
 
 
 
$1.0 billion notional
$
(1,124
)
 
Accounts payable and
accrued liabilities $(63);
Other long-term liabilities
$(1,061)
 
$
(1,261
)
 
Accounts payable and
accrued liabilities $(62); Other long-term liabilities $(1,199)
$476 million notional
(436
)
 
Accounts payable and
accrued liabilities $(23);
Other long-term liabilities
$(413)
 
(498
)
 
Accounts payable and
accrued liabilities $(24);
Other long-term liabilities
$(474)
$42 million notional
(5
)
 
Accounts payable and
accrued liabilities $(2); Other long-term liabilities $(3)
 
(5
)
 
Accounts payable and
accrued liabilities $(2); Other long-term liabilities $(3)
Commodity contract derivatives
(62
)
 
Other current assets $4; Accounts payable and accrued liabilities $(49); Other long-term liabilities $(17)
 
(41
)
 
Other current assets $12; Accounts payable and accrued liabilities $(37); Other long-term liabilities $(16)
Commodity Contract Derivatives
Commodity Contract Derivatives 
 
At December 31, 2019
 
At September 30, 2019
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
Coal contract derivatives
9
 
10 million tons
 
$
(16
)
 
8
 
9 million tons
 
$
(4
)
Natural gas contract derivatives
53
 
365 million mmBtu
 
$
(46
)
 
65
 
330 million mmBtu
 
$
(37
)
Offsetting Assets and Liabilities
The amounts of TVA's derivative instruments as reported on the Consolidated Balance Sheets at December 31, 2019, and September 30, 2019, are shown in the table below:
Derivative Assets and Liabilities(1)
 
At December 31, 2019
 
At September 30, 2019
Assets
 
 
 
Commodity derivatives not subject to master netting or similar arrangement
$
4

 
$
12

 
 
 
 
Liabilities
 
 
 
Currency swaps(2)
$
132

 
$
208

Interest rate swaps(2)
1,565

 
1,764

Total derivatives subject to master netting or similar arrangement
1,697

 
1,972

Commodity derivatives not subject to master netting or similar arrangement
66

 
53

Total liabilities
$
1,763

 
$
2,025

Notes
(1) Offsetting 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. There were no offsetting amounts on TVA's Consolidated Balance Sheets at either December 31, 2019 or September 30, 2019.
(2) Letters of credit of approximately $1.2 billion and $1.3 billion were posted as collateral at December 31, 2019, and September 30, 2019, 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.