Tennessee Valley AuthorityTVE
Tennessee Valley Authority Revenue Disclosure
18. Revenue
Revenue from Sales of Electricity
TVA's revenue from contracts with customers is primarily derived from the generation and sale of electricity to its customers and is included in Revenue from sales of electricity on the Consolidated Statements of Operations. Electricity is sold primarily to LPCs for distribution to their end-use customers. In addition, TVA sells electricity to directly served industrial companies, federal agencies, and others.
| LPC sales | Approximately 91 percent of TVA's Revenue from sales of electricity for the year ended September 30, 2025, and approximately 92 percent of TVA's Revenue from sales of electricity for both the years ended September 30, 2024 and 2023, was from LPCs, which then distribute the power to their customers using their own distribution systems. Power is delivered to each LPC at delivery points within the LPC's service territory. TVA recognizes revenue when the customer takes possession of the power at the delivery point. For power sales, the performance obligation to deliver power is satisfied in a series over time because the sales of electricity over the term of the customer contract are a series of distinct goods that are substantially the same and have the same pattern of transfer to the customer. TVA has no continuing performance obligations subsequent to delivery. Using the output method for revenue recognition provides a faithful depiction of the transfer of electricity as customers obtain control of the power and benefit from its use at delivery. Additionally, TVA has an enforceable right to consideration for energy delivered at any discrete point in time and will recognize revenue at an amount that reflects the consideration to which TVA is entitled for the energy delivered. The amount of revenue is based on contractual prices approved by the TVA Board. Customers are invoiced monthly for power delivered as measured by meters located at the delivery points. The net transaction price is offset by certain credits available to customers that are known at the time of billing. Credits are designed to achieve objectives of the TVA Act and include items such as hydro preference credits for residential customers of LPCs, economic development credits to promote growth in the Tennessee Valley, wholesale bill credits to maintain long-term partnerships with LPCs, pandemic credits, and demand response credits allowing TVA to reduce industrial customer usage in periods of peak demand to balance system demand. The pandemic credits ended September 30, 2023. Payments are typically due within approximately one month of invoice issuance. | ||||
| Directly served customers | Directly served customers, including industrial customers, federal agencies, and other customers, take power for their own consumption. Similar to LPCs, power is delivered to a delivery point, at which time the customer takes possession and TVA recognizes revenue. For all power sales, the performance obligation to deliver power is satisfied in a series over time since the sales of electricity over the term of the customer contract are a series of distinct goods that are substantially the same and have the same pattern of transfer to the customer. TVA has no continuing performance obligations subsequent to delivery. Using the output method for revenue recognition provides a faithful depiction of the transfer of electricity as customers obtain control of the power and benefit from its use at delivery. Additionally, TVA has an enforceable right to consideration for energy delivered at any discrete point in time and will recognize revenue at an amount that reflects the consideration to which TVA is entitled for the energy delivered. The amount of revenue is based on contractual prices approved by the TVA Board. Customers are invoiced monthly for power delivered as measured by meters located at the delivery points. The net transaction price is offset by certain credits available to customers that are known at the time of billing. Examples of credits include items such as economic development credits to promote growth in the Tennessee Valley and demand response credits allowing TVA to reduce industrial customer usage in periods of peak demand to balance system demand. Payments are typically due within approximately one month of invoice issuance. | ||||
Other Revenue
Other revenue consists primarily of wheeling and network transmission charges, sales of excess steam that is a by-product of power production, delivery point charges for interconnection points between TVA and the customer, REC sales, and certain other ancillary goods or services.
Disaggregated Revenues
During 2025, revenues generated from TVA's electricity sales were $13.5 billion and accounted for virtually all of TVA's revenues. TVA's operating revenues by state for each of the last three years are detailed in the table below:
Operating Revenues By State For the years ended September 30 (in millions) | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Alabama | $ | 1,995 | $ | 1,768 | $ | 1,731 | |||||||||||
Georgia | 329 | 295 | 284 | ||||||||||||||
Kentucky | 850 | 776 | 773 | ||||||||||||||
Mississippi | 1,254 | 1,150 | 1,146 | ||||||||||||||
North Carolina | 88 | 89 | 89 | ||||||||||||||
Tennessee | 8,915 | 7,998 | 7,819 | ||||||||||||||
Virginia | 52 | 47 | 46 | ||||||||||||||
| Subtotal | 13,483 | 12,123 | 11,888 | ||||||||||||||
| Off-system sales | 7 | 8 | 14 | ||||||||||||||
Revenue capitalized during pre-commercial plant operations(1) | (4) | (3) | (3) | ||||||||||||||
| Revenue from sales of electricity | 13,486 | 12,128 | 11,899 | ||||||||||||||
| Other revenue | 186 | 186 | 155 | ||||||||||||||
| Total operating revenues | $ | 13,672 | $ | 12,314 | $ | 12,054 | |||||||||||
Note
(1) Represents revenue capitalized during pre-commercial operations at Johnsonville Aeroderivative CT Units 21-30 in 2025 and Paradise CT Units 5-7 in 2024.
TVA's operating revenues by customer type for each of the last three years are detailed in the table below:
Operating Revenues by Customer Type For the years ended September 30 (in millions) | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenue from sales of electricity | |||||||||||||||||
| Local power companies | $ | 12,334 | $ | 11,138 | $ | 10,903 | |||||||||||
| Industries directly served | 1,017 | 868 | 864 | ||||||||||||||
| Federal agencies and other | 139 | 125 | 135 | ||||||||||||||
Revenue capitalized during pre-commercial plant operations(1) | (4) | (3) | (3) | ||||||||||||||
| Revenue from sales of electricity | 13,486 | 12,128 | 11,899 | ||||||||||||||
| Other revenue | 186 | 186 | 155 | ||||||||||||||
| Total operating revenues | $ | 13,672 | $ | 12,314 | $ | 12,054 | |||||||||||
Note
(1) Represents revenue capitalized during pre-commercial operations at Johnsonville Aeroderivative CT Units 21-30 in 2025 and Paradise CT Units 5-7 in 2024.
TVA and LPCs continue to work together to meet the changing needs of consumers around the Tennessee Valley. In 2019, the TVA Board approved a partnership agreement option that better aligns the length of LPC power contracts with TVA's long-term commitments. Under the partnership arrangement, the LPC power contracts automatically renew each year and have a 20-year termination notice. The partnership arrangements can be terminated under certain circumstances, including TVA's failure to limit rate increases to no more than 10 percent during any consecutive five-fiscal-year period, as more specifically described in the agreements. Participating LPCs receive benefits including a 3.1 percent wholesale bill credit in exchange for their long-term commitment, which enables TVA to recover its long-term financial commitments over a commensurate period. The total wholesale bill credits to LPCs participating in the Partnership Agreement were $231 million, $215 million, and $199 million, respectively, for the years ended September 30, 2025, 2024, and 2023. In 2020, TVA provided participating LPCs a flexibility option, named Generation Flexibility, that allows them to locally generate or purchase up to approximately five percent of their average total hourly energy sales over a certain time period in order to meet their individual customers' needs. Revised flexibility agreements were made available to LPCs in August 2023 which permit projects to be located anywhere in TVA's service area, either connected to the LPC distribution system or TVA's transmission system, and make it easier for LPCs to partner in projects. As of September 30, 2025, 148 LPCs had signed the Partnership Agreement with TVA, and 109 LPCs had signed a Power Supply Flexibility Agreement.
In previous years, the TVA Board approved pandemic credits, which were effective in 2023. These credits provided an annual 2.5 percent monthly base rate credit and applied to service provided to TVA's LPCs, their large commercial and industrial customers, and TVA directly served customers. For the year ended September 30, 2023, pandemic credits totaled $225 million. The pandemic credits ended September 30, 2023.
The number of LPCs by contract arrangement, the revenues derived from such arrangements for 2025, and the percentage those revenues comprised of TVA's total operating revenues for 2025, are summarized in the table below:
TVA Local Power Company Contracts At or for the year ended September 30, 2025 | |||||||||||||||||
Contract Arrangements(1) | Number of LPCs | Revenue from Sales of Electricity to LPCs (in millions) | Percentage of Total Operating Revenues | ||||||||||||||
| 20-year termination notice | 148 | $ | 10,636 | 77.8 | % | ||||||||||||
| 5-year termination notice | 5 | 1,698 | 12.4 | % | |||||||||||||
| Total | 153 | $ | 12,334 | 90.2 | % | ||||||||||||
Note
(1) Ordinarily, the LPCs and TVA have the same termination notice period; however, in a contract with one of the LPCs with a five-year termination notice, TVA has a 10-year termination notice (which becomes a five-year termination notice if TVA loses its discretionary wholesale rate-setting authority). Certain LPCs have five-year termination notices or a shorter period if any act of Congress, court decision, or regulatory change requires or permits that election.
TVA's two largest LPCs — Memphis Light, Gas and Water Division ("MLGW") and Nashville Electric Service ("NES") — have contracts with a five-year and a 20-year termination notice period, respectively. Sales to MLGW and NES accounted for nine percent and eight percent, respectively, of TVA's total operating revenues in 2025, 2024, and 2023.
Contract Balances
Contract assets represent an entity's right to consideration in exchange for goods and services that the entity has transferred to customers. TVA did not have any material contract assets at September 30, 2025.
Contract liabilities represent an entity's obligations to transfer goods or services to customers for which the entity has received consideration (or an amount of consideration is due) from the customers. These contract liabilities are primarily related to upfront consideration received prior to the satisfaction of the performance obligation. See Economic Development Incentives below and Note 13 — Other Long-Term Liabilities — Long-Term Deferred Revenue.
Economic Development Incentives. Under certain economic development programs TVA offers incentives to existing and potential power customers in targeted business sectors that make multi-year commitments to invest in the Tennessee Valley. TVA records those incentives as reductions of revenue. Incentives recorded as a reduction to revenue were $321 million, $318 million, and $330 million for 2025, 2024, and 2023, respectively. Incentives that have been approved but have not been paid are recorded in Accounts payable and accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. At September 30, 2025 and 2024, the outstanding unpaid incentives were $193 million and $187 million, respectively. Incentives that have been paid out may be subject to claw back if the customer fails to meet certain program requirements.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 13, 2025 | Showing above |
| 2024 | Nov 14, 2024 | |
| 2023 | Nov 14, 2023 | |
| 2021 | Nov 15, 2021 | |
| 2020 | Nov 17, 2020 | |
| 2019 | Nov 15, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.