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Plant Closures (Text Block)
9 Months Ended
Jun. 30, 2022
Property, Plant and Equipment Impairment or Disposal [Abstract]  
Plant Closures Disclosure Plant Closures
Background

TVA must continuously evaluate all generating assets to ensure an optimal energy portfolio that provides safe, clean, and reliable power while maintaining flexibility and fiscal responsibility to the people of the Tennessee Valley. Based on results of assessments presented to the TVA Board in 2019, the retirement of Bull Run Fossil Plant ("Bull Run") by December 2023 was approved. In addition, TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035, and that evaluation includes environmental reviews, public input, and TVA Board approval. Due to these evaluations, certain planning assumptions were updated, and their financial impacts are discussed below.
Financial Impact

TVA's policy is to adjust depreciation rates to reflect the most current assumptions, ensuring units will be fully depreciated by the applicable retirement dates. As a result of TVA's decision to accelerate the retirement of Bull Run, TVA has recognized a cumulative $447 million of accelerated depreciation since the second quarter of 2019. Of this amount, $35 million was recognized for Bull Run during both the three months ended June 30, 2022 and the three months ended June 30, 2021, and $105 million and $102 million were recognized during the nine months ended June 30, 2022 and the nine months ended June 30, 2021, respectively.

In addition, service lives for Cumberland Fossil Plant, Gallatin Fossil Plant, Kingston Fossil Plant ("Kingston"), and Shawnee Fossil Plant were lowered in a new depreciation study implemented during the first quarter of 2022 to reflect current planning assumptions to potentially retire the remainder of the coal-fired fleet by 2035. As a result, TVA recognized an estimated $253 million of additional depreciation related to these four coal-fired plants during the nine months ended June 30, 2022. This estimate represents the effect of using the new depreciation rates on the property, plant, and equipment balances at June 30, 2021, and does not include any potential impact from additions to or retirements of net completed plant that occurred since June 30, 2021.

During the nine months ended June 30, 2022, TVA also recognized $17 million in Operating and maintenance expense related to additional inventory reserves and write-offs for the coal-fired fleet, including Bull Run. Of this amount, $6 million was recognized during the three months ended June 30, 2022.