Tennessee Valley Authority

What they do

TVA generates and sells electricity at wholesale to 153 local power company customers and 62 directly served customers, including seven federal agencies, and manages the Tennessee River system for navigation, flood control, and recreation. It operates under the TVA Act, which confines its power sales to a defined service area (the 'fence') and protects its transmission access via the Anti-Cherrypicking Amendment. As a wholly-owned U.S. instrumentality, TVA cannot issue equity and may have no more than $30.0 billion of bonds outstanding at any time.

Revenue drivers

• Wholesale power sales to local power companies — TVA sells power at wholesale to 153 LPCs that resell it at retail; these customers serve approximately 10 million people and are the core of the franchise.
• Directly served customers — 62 customers, including seven federal agencies and large or nonstandard loads, buy power directly from TVA.
• Data processing, web hosting and related services sector — Recent volume growth is attributed primarily to higher sales within this sector, which is driving load increases.
• Exchange power arrangements — Power exceeding TVA's system needs is sold under exchange power arrangements with certain other power systems.

Recent performance

For the nine months ended June 30, 2026, operating revenues were $10.0 billion versus $9.8 billion a year earlier, driven by higher fuel cost recovery rates and higher sales volume. Total operating expenses rose $48 million, as fuel and purchased power expense increased $253 million due to higher natural gas prices and purchased power market prices, largely offset by a $161 million decrease in depreciation from revised depreciable-life assumptions at the Kingston and Cumberland coal plants and the Browns Ferry nuclear plant, plus a $76 million decline in operating and maintenance expense from IRA tax credits. Electricity sales were 121,771 million kWh for the nine months, up from 120,527 million kWh, with the increase partly offset by a 33 percent decrease in heating degree days in the second quarter. Annual net income was $1.14 billion in 2024 and $1.36 billion in 2025; operating cash flow was $3.32 billion in 2025.

Strategy

TVA states five strategic priorities and a mission built on energy, environment and economic development, with an emphasis on reliable low-cost power and what it describes as unleashing American energy. The pre-commercial start of Cumberland Combined Cycle Gas Plant Units 1 and 2 in the third quarter of 2026 is the most recent capacity addition cited. TVA continues to fund operations and stewardship activities almost entirely from power revenues and power program borrowings, with no congressional appropriations since 1999. Management notes strategic priorities may be revisited once a Board quorum is restored, following a series of recent director or officer changes disclosed in 2026 8-K filings.

Risks

• Environmental compliance costs — TVA is subject to significant environmental laws and orders, and costs could exceed expectations if it must retire generation earlier than planned or change its CCR closure methodology.
• Regulatory and legal change — New or reinterpreted laws on coal combustion residuals, air and water pollution, or natural gas and transmission regulation could adversely affect TVA.
• Service area limitations — The TVA Act 'fence' limits where TVA can sell power, and the company notes efforts to circumvent the anti-cherrypicking protection that shields it from providing transmission access to competitors within its territory.
• Wholesale power cost volatility — Higher natural gas and purchased power market prices raised fuel and purchased power expense by $253 million in the first nine months of fiscal 2026 and flow through fuel cost recovery rates.

Outlook

Management attributes recent revenue growth to higher fuel cost recovery rates and higher sales volume, particularly from the data processing, web hosting and related services sector, and expects weather to continue affecting both demand and price. The Cumberland Combined Cycle Gas Plant Units 1 and 2 began pre-commercial operations in the third quarter of 2026, adding capacity. No forward guidance figures are provided in the excerpts.