Tennessee Valley AuthorityTVE
Tennessee Valley Authority Leases Disclosure
. 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) | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Assets | ||||||||||||||
| Operating | Operating lease assets, net of amortization | $ | 113 | $ | 149 | |||||||||
| Finance | Finance leases | 663 | 729 | |||||||||||
| Total lease assets | $ | 776 | $ | 878 | ||||||||||
| Liabilities | ||||||||||||||
| Current | ||||||||||||||
| Operating | Accounts payable and accrued liabilities | $ | 46 | $ | 63 | |||||||||
| Finance | Accounts payable and accrued liabilities | 86 | 80 | |||||||||||
| Non-current | ||||||||||||||
| Operating | Other long-term liabilities | |||||||||||||
| Finance | Finance lease liabilities | 640 | 700 | |||||||||||
| Total lease liabilities | $ | 835 | $ | 931 | ||||||||||
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 21 years. The components of lease costs were as follows:
Lease Costs For the years ended September 30 (in millions) | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Operating lease costs(1) | $ | 73 | $ | 77 | $ | 69 | |||||||||||
Variable lease costs(1)(5) | 337 | 258 | 134 | ||||||||||||||
Short-term lease costs(1) | 15 | 10 | 18 | ||||||||||||||
| Finance lease costs | |||||||||||||||||
Amortization of lease assets(2) | 91 | 79 | 57 | ||||||||||||||
Interest on lease liabilities(3)(4) | 46 | 37 | 43 | ||||||||||||||
| Total finance lease costs | 137 | 116 | 100 | ||||||||||||||
| Total lease costs | $ | 562 | $ | 461 | $ | 321 | |||||||||||
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 energy payments that are based on energy production levels. 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) | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating cash flows for operating leases | $ | 72 | $ | 78 | $ | 77 | |||||||||||
| Operating cash flows for finance leases | 46 | 37 | 43 | ||||||||||||||
| Financing cash flows for finance leases | 82 | 76 | 56 | ||||||||||||||
| Lease assets obtained in exchange for lease obligations (non-cash) | |||||||||||||||||
| Operating leases | $ | 14 | $ | 115 | $ | 84 | |||||||||||
| Finance leases | 28 | 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 | |||||||||||
| 2025 | 2024 | ||||||||||
| Weighted average remaining lease terms | |||||||||||
| Operating leases | 3 years | 4 years | |||||||||
Finance leases(1) | 8 years | 9 years | |||||||||
Weighted average discount rate(2) | |||||||||||
| Operating leases | 4.2% | 4.3% | |||||||||
| Finance leases | 17.0% | 17.6% | |||||||||
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, 2025:
Future Minimum Lease Payments Minimum payments outstanding at September 30, 2025 (in millions) | |||||
| Operating leases | |||||
| 2026 | $ | 50 | |||
| 2027 | 35 | ||||
| 2028 | 19 | ||||
| 2029 | 4 | ||||
| 2030 | 2 | ||||
| Thereafter | 6 | ||||
| Minimum annual payments | 116 | ||||
| Less: present value discount | (7) | ||||
| Operating present value of net minimum lease payments | $ | 109 | |||
| Finance leases | |||||
| 2026 | $ | 144 | |||
| 2027 | 142 | ||||
| 2028 | 137 | ||||
| 2029 | 134 | ||||
| 2030 | 133 | ||||
| Thereafter | 340 | ||||
| Minimum annual payments | 1,030 | ||||
| Less: amount representing interest | (304) | ||||
| Finance present value of net minimum lease payments | $ | 726 | |||
TVA has entered into three 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 2026 and December 2028. Total capacity payments related to these batteries over the term of these PPAs are expected to total $862 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 13, 2025 | Showing above |
| 2024 | Nov 14, 2024 | |
| 2023 | Nov 14, 2023 | |
| 2022 | Nov 15, 2022 | |
| 2021 | Nov 15, 2021 | |
| 2020 | Nov 17, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.