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Leases (Text Block) | 12 Months Ended
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Sep. 30, 2024
Leases [Abstract] |
Lessee, Operating Leases | 8. Leases The following table provides information regarding the presentation of leases on the Consolidated Balance Sheets:
Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions)
|  | 2024 |  | 2023
Assets |  |  |  |
Operating | Operating lease assets, net of amortization | $ | 149 |  |  | $ | 177 |
Finance | Finance leases | 729 |  |  | 572 |
Total lease assets |  | $ | 878 |  |  | $ | 749 |
Liabilities |  |  |  |
Current |  |  |  |
Operating | Accounts payable and accrued liabilities | $ | 63 |  |  | $ | 71 |
Finance | Accounts payable and accrued liabilities | 80 |  |  | 56 |
Non-current |  |  |  |
Operating | Other long-term liabilities | 88 |  |  | 93 |
Finance | Finance lease liabilities | 700 |  |  | 576 |
Total lease liabilities |  | $ | 931 |  |  | $ | 796 |
TVA's leases consist primarily of railcars, equipment, real estate/land, power generating facilities, and gas pipelines. TVA's leases have various terms and expiration dates remaining from less than one year to 22 years. The components of lease costs were as follows:
Lease Costs For the years ended September 30 (in millions)
| 2024 |  | 2023 |  | 2022 |  |
Operating lease costs(1) | $ | 77 |  |  | $ | 69 |  |  | $ | 56 |  |  |
Variable lease costs(1)(5) | 258 |  |  | 134 |  |  | 78 |  |  |
Short-term lease costs(1) | 10 |  |  | 18 |  |  | 26 |  |  |
Finance lease costs |  |  |  |  |  |  |
Amortization of lease assets(2) | 79 |  |  | 57 |  |  | 58 |  |  |
Interest on lease liabilities(3)(4) | 37 |  |  | 43 |  |  | 42 |  |  |
Total finance lease costs | 116 |  |  | 100 |  |  | 100 |  |  |
Total lease costs | $ | 461 |  |  | $ | 321 |  |  | $ | 260 |  |  |
Notes (1) Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations. (2) Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations. (3) Expense is included in Interest expense on the Consolidated Statements of Operations. (4) Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense. (5) Variable lease costs include costs related to variable payments that are based on energy production levels, which are allocated to expense based on the determination of lease and non-lease components associated with the underlying agreements. TVA's variable lease costs are primarily related to renewable energy purchase agreements that require TVA to purchase all output from the underlying facility. Payments under those agreements are solely based on the actual output over the lease term. Certain TVA lease agreements contain renewal options. Those renewal options that are reasonably certain to be exercised are included in the lease measurements. The following table contains additional information with respect to cash and non-cash activities related to leases:
Amounts Recognized on TVA's Consolidated Statements of Cash Flows For the years ended September 30 (in millions)
| 2024 |  | 2023 |  | 2022
Operating cash flows for operating leases | $ | 78 |  |  | $ | 77 |  |  | $ | 57 |
Operating cash flows for finance leases | 37 |  |  | 43 |  |  | 42 |
Financing cash flows for finance leases | 76 |  |  | 56 |  |  | 60 |
Lease assets obtained in exchange for lease obligations (non-cash) |  |  |  |  |
Operating leases | $ | 115 |  |  | $ | 84 |  |  | $ | 43 |
Finance leases | 230 |  |  | 3 |  |  | — |
TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement. This resulted in an interest rate that was higher than TVA's incremental borrowing rate. The weighted average remaining lease terms in years and the weighted average discount rate for TVA's operating and finance leases were as follows:
Weighted Averages At September 30
| 2024 |  | 2023
Weighted average remaining lease terms |  |  |
Operating leases | 4 years |  | 3 years
Finance leases(1) | 9 years |  | 10 years
Weighted average discount rate(2) |  |  |
Operating leases | 4.3% |  | 4.1%
Finance leases | 17.6% |  | 21.6%
Note (1) One of TVA's finance leases includes an option period to extend, which TVA is reasonably certain to exercise. (2) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. If the rate used by the lessor is not readily determinable, TVA uses its incremental borrowing rate as permitted by accounting guidance. The incremental borrowing rate is influenced by TVA's credit rating and lease term and as such may differ for individual leases, embedded leases, or portfolios of leased assets. . The following table presents maturities of lease liabilities and a reconciliation of the undiscounted cash flows to lease liabilities at September 30, 2024:
Future Minimum Lease Payments Minimum payments outstanding at September 30, 2024 (in millions)
Operating leases |
2025 | $ | 68 |
2026 | 34 |
2027 | 31 |
2028 | 18 |
2029 | 4 |
Thereafter | 8 |
Minimum annual payments | 163 |
Less: present value discount | (12) |
Operating present value of net minimum lease payments | $ | 151 |
Finance leases |
2025 | $ | 140 |
2026 | 139 |
2027 | 137 |
2028 | 133 |
2029 | 132 |
Thereafter | 452 |
Minimum annual payments | 1,133 |
Less: amount representing interest | (353) |
Finance present value of net minimum lease payments | $ | 780 |
TVA has entered into four PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems. The systems are considered a lease component in these agreements. These PPAs have terms of 15 - 20 years and are expected to commence between January 2025 and December 2028. Total capacity payments related to these batteries over the term of these PPAs are expected to total $991 million.
Lessee, Finance Leases | 8. Leases The following table provides information regarding the presentation of leases on the Consolidated Balance Sheets:
Amounts Recognized on TVA's Consolidated Balance Sheets At September 30 (in millions)
|  | 2024 |  | 2023
Assets |  |  |  |
Operating | Operating lease assets, net of amortization | $ | 149 |  |  | $ | 177 |
Finance | Finance leases | 729 |  |  | 572 |
Total lease assets |  | $ | 878 |  |  | $ | 749 |
Liabilities |  |  |  |
Current |  |  |  |
Operating | Accounts payable and accrued liabilities | $ | 63 |  |  | $ | 71 |
Finance | Accounts payable and accrued liabilities | 80 |  |  | 56 |
Non-current |  |  |  |
Operating | Other long-term liabilities | 88 |  |  | 93 |
Finance | Finance lease liabilities | 700 |  |  | 576 |
Total lease liabilities |  | $ | 931 |  |  | $ | 796 |
TVA's leases consist primarily of railcars, equipment, real estate/land, power generating facilities, and gas pipelines. TVA's leases have various terms and expiration dates remaining from less than one year to 22 years. The components of lease costs were as follows:
Lease Costs For the years ended September 30 (in millions)
| 2024 |  | 2023 |  | 2022 |  |
Operating lease costs(1) | $ | 77 |  |  | $ | 69 |  |  | $ | 56 |  |  |
Variable lease costs(1)(5) | 258 |  |  | 134 |  |  | 78 |  |  |
Short-term lease costs(1) | 10 |  |  | 18 |  |  | 26 |  |  |
Finance lease costs |  |  |  |  |  |  |
Amortization of lease assets(2) | 79 |  |  | 57 |  |  | 58 |  |  |
Interest on lease liabilities(3)(4) | 37 |  |  | 43 |  |  | 42 |  |  |
Total finance lease costs | 116 |  |  | 100 |  |  | 100 |  |  |
Total lease costs | $ | 461 |  |  | $ | 321 |  |  | $ | 260 |  |  |
Notes (1) Costs are included in Operating and maintenance expense, Fuel expense, Purchased power expense, and Tax equivalents expense on the Consolidated Statements of Operations. (2) Expense is included in Depreciation and amortization expense on the Consolidated Statements of Operations. (3) Expense is included in Interest expense on the Consolidated Statements of Operations. (4) Certain finance leases receive regulatory accounting treatment and are reclassified to Fuel expense and Purchased power expense. (5) Variable lease costs include costs related to variable payments that are based on energy production levels, which are allocated to expense based on the determination of lease and non-lease components associated with the underlying agreements. TVA's variable lease costs are primarily related to renewable energy purchase agreements that require TVA to purchase all output from the underlying facility. Payments under those agreements are solely based on the actual output over the lease term. Certain TVA lease agreements contain renewal options. Those renewal options that are reasonably certain to be exercised are included in the lease measurements. The following table contains additional information with respect to cash and non-cash activities related to leases:
Amounts Recognized on TVA's Consolidated Statements of Cash Flows For the years ended September 30 (in millions)
| 2024 |  | 2023 |  | 2022
Operating cash flows for operating leases | $ | 78 |  |  | $ | 77 |  |  | $ | 57 |
Operating cash flows for finance leases | 37 |  |  | 43 |  |  | 42 |
Financing cash flows for finance leases | 76 |  |  | 56 |  |  | 60 |
Lease assets obtained in exchange for lease obligations (non-cash) |  |  |  |  |
Operating leases | $ | 115 |  |  | $ | 84 |  |  | $ | 43 |
Finance leases | 230 |  |  | 3 |  |  | — |
TVA has certain finance leases under PPAs under which the present value of the minimum lease payments exceeds the fair value of the related lease asset at the date of measurement. This resulted in an interest rate that was higher than TVA's incremental borrowing rate. The weighted average remaining lease terms in years and the weighted average discount rate for TVA's operating and finance leases were as follows:
Weighted Averages At September 30
| 2024 |  | 2023
Weighted average remaining lease terms |  |  |
Operating leases | 4 years |  | 3 years
Finance leases(1) | 9 years |  | 10 years
Weighted average discount rate(2) |  |  |
Operating leases | 4.3% |  | 4.1%
Finance leases | 17.6% |  | 21.6%
Note (1) One of TVA's finance leases includes an option period to extend, which TVA is reasonably certain to exercise. (2) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. If the rate used by the lessor is not readily determinable, TVA uses its incremental borrowing rate as permitted by accounting guidance. The incremental borrowing rate is influenced by TVA's credit rating and lease term and as such may differ for individual leases, embedded leases, or portfolios of leased assets. . The following table presents maturities of lease liabilities and a reconciliation of the undiscounted cash flows to lease liabilities at September 30, 2024:
Future Minimum Lease Payments Minimum payments outstanding at September 30, 2024 (in millions)
Operating leases |
2025 | $ | 68 |
2026 | 34 |
2027 | 31 |
2028 | 18 |
2029 | 4 |
Thereafter | 8 |
Minimum annual payments | 163 |
Less: present value discount | (12) |
Operating present value of net minimum lease payments | $ | 151 |
Finance leases |
2025 | $ | 140 |
2026 | 139 |
2027 | 137 |
2028 | 133 |
2029 | 132 |
Thereafter | 452 |
Minimum annual payments | 1,133 |
Less: amount representing interest | (353) |
Finance present value of net minimum lease payments | $ | 780 |
TVA has entered into four PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems. The systems are considered a lease component in these agreements. These PPAs have terms of 15 - 20 years and are expected to commence between January 2025 and December 2028. Total capacity payments related to these batteries over the term of these PPAs are expected to total $991 million.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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