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Frequently Asked Questions

What is TVA?

TVA is a the nation’s largest public power company and a wholly-owned government corporation that provides electricity to local power companies and large industrial and federal customers, serving nearly 10 million people in parts of seven southeastern states. TVA also provides flood control, navigation, and land management for the Tennessee River system, as well as economic development support in our territory.

When was TVA established?

The U.S. Congress created TVA with the passage of the TVA Act in 1933, primarily to reduce flood damage, improve navigation on the Tennessee River, provide electric power, and promote “agricultural and industrial development” in the region.

Who benefits from TVA’s activities?

By providing wholesale power to 154 municipal and cooperative power distributors, and by directly serving large industrial and governmental customers in the Valley, TVA supplies the electricity needs of nearly ten million people at prices below the national average. TVA serves the public users of TVA lands and recreational facilities, and it provides economic development assistance to communities throughout the Valley.

Which areas receive TVA power?

TVA’s power-service area covers 80,000 square miles in seven southeastern United States, including almost all of Tennessee, and parts of Mississippi, Kentucky, Alabama, Georgia, North Carolina, and Virginia.

How many employees work at TVA?

In 2018, TVA had about 10,000 employees stationed throughout the Valley.

How is TVA funded?

In fiscal year 2018, TVA's operating revenue was $11.2 billion. TVA receives no public tax dollars; instead, it finances all of its programs, including those for environmental protection, integrated river management, and economic development, almost entirely through power sales and power program financings.

What kind of public tax support does TVA get?

TVA no longer receives congressional appropriations to help fund its activities.

Does TVA pay taxes?

TVA makes tax-equivalent payments annually to state and local governments in eight states. In fiscal year 2018, those payments totaled nearly $518 million. They are based on power sales revenue in the previous year and property owned by TVA in each state. Such payments make TVA one of the largest “taxpayers” in Tennessee and Alabama. In addition to the seven states and many counties in the Tennessee Valley region, the state of Illinois and two of its counties receive payments for coal reserves TVA owns there. Since 1941, TVA has made more than $13 billion in tax equivalent payments, with payments in the past 10 years totaling over $5.3 billion.

How does TVA generate electricity?

In 2018, TVA generated electricity through the following resources:

  • Nuclear – 39%
  • Natural gas and/or oil-fired – 20%
  • Coal-fired – 19%
  • Hydroelectric – 9%
  • Purchased power (non-renewable) – 9%
  • Purchased power (renewable) – 4%
  • How is TVA-generated electricity distributed?

    TVA provides electric power to 154 local power distributors through a network of approximately 16,000 miles of transmission line and 3,600 miles of fiber. These local utilities deliver power to homes, businesses, and industries throughout TVA’s service area. TVA also sells power directly to various large industrial and governmental customers.

    How do TVA’s rates compare with those of other power companies?

    As of July 2018, TVA’s residential rate was 10.74 cents per kilowatt-hour, ranking 22nd best among the nation’s top 100 utilities. TVA’s industrial rate was 5.17 cents per kilowatt-hour, ranking 9th best among the nation’s top 100 utilities. Both TVA’s residential and industrial rates ranked in the top quartile among the nation’s top 100 utilities.

    What does TVA do to ensure nuclear-plant safety?

    Nuclear plants are designed to produce large amounts of electricity with maximum safety. TVA’s nuclear plants meet extremely rigid and demanding construction and operation safety standards that are established and constantly monitored by the U.S. Nuclear Regulatory Commission. Without NRC approval, TVA nuclear plants could not operate.

    To meet NRC standards and fulfill its responsibility to communities near TVA nuclear plants, TVA employs only highly trained, skilled professionals to maintain and operate the plants. Training for these employees is extensive. Earning a reactor operator’s license, for example, requires twice as much training in the classroom, on a simulator, and on the job as getting a commercial airline pilot’s license. And to keep their licenses, all nuclear-plant operators must be regularly retested.

    What approach does TVA take to the management of the Tennessee River and its tributaries?

    TVA’s 49 dams are public assets managed in the public interest. Its operations and policies strive to maintain a reliable balance among the competing demands placed on the water and land resources. TVA’s integrated resource management ensures that precious water resources are not wasted. As water flows downstream, it’s used for drinking, fish habitat, navigation, coolant for power plants, energy to spin turbines, and recreation.

    How does TVA protect the environment?

    TVA’s watershed teams work with state and local communities to protect shorelines, conserve fisheries, and maintain water quality. In addition, TVA manages water flows to increase oxygen concentrations to improve aquatic habitat. Such activities support TVA’s mission of environmental stewardship.

    In addition, TVA continues its aggressive clean-air program. From 1970 to 2018, TVA has spent about $6.7 billion on emissions controls at its power plants to help TVA generate power as cleanly as possible, consistent with efficiency. Emissions of nitrogen oxidesfrom the TVA system have been reduced by 94 percent below peak 1995 levels, emissions of sulfur dioxide from the TVA system have been reduced by 98 percent below 1977 levels, and emissions of carbon dioxide from the TVA system have been reduced by 47 percent below 2005 levels.

    What contribution does TVA make to the Valley economy?

    TVA’s most important contribution is keeping power rates competitive. This helps attract industries that bring good jobs to the region. Low power rates also give Valley residents more money to spend on other goods and services.

    TVA also supports economic development, primarily by helping communities help themselves. That assistance includes stimulating capital investment, creating jobs, improving business and workforce productivity, bringing communities into the Information Age, supporting small-business incubators, and promoting sustainable development throughout the region. In fiscal year 2018, TVA helped attract and retain over 65,000 jobs and over $11.3 billion in capital investment to the TVA service area.

    What changes did the Consolidated Appropriations Act of 2005 bring to TVA?

    Among other things, it changed the structure of TVA's management and required TVA to begin filing financial reports with the Securities and Exchange Commission (SEC). More specifically, the legislation:

    • Changed the structure of the TVA Board of Directors (Board) from a three-person, full-time Board to a nine-person, part-time Board, which meets at least four times per year. The new Board members are still appointed by the President and confirmed by the Senate.
    • Affirmed that the Board will retain the ability to set power rates for TVA.
    • Stipulated qualifications for Board members and changed the appointment term to five years.
    • Established the position of Chief Executive Officer (CEO) to be appointed by the new Board.
    • Required the Board to approve a Compensation Plan for TVA employees.
    • Outlined the requirements and duties of the Board and CEO and their relationship to each other. In general, the Board establishes TVA's strategic direction and policies, while the CEO oversees implementation of such direction and policies and TVA's overall operations.
    • Created an Audit Committee composed solely of Board members independent of management, which (1) in consultation with the Inspector General of TVA, recommends the external auditor to the Board, (2) receives and reviews reports from the external auditor and TVA's Inspector General, and (3) makes such recommendations to the Board as the Audit Committee deems necessary.
    • Directed TVA to begin filing reports on Forms 10-K, 10-Q, and 8-K with the SEC. TVA's SEC reporting commenced with TVA's fiscal year 2006 annual report. The legislation did not require TVA to register its securities with the SEC.
    Was TVA's status as a wholly-owned government corporation been changed by the legislation?

    No. The legislation did not affect TVA's status as a wholly-owned entity of the U.S. federal government or its mission under the TVA Act, nor did it diminish or impair the Board's authority to carry out its statutory functions (including setting power rates).

    When was TVA required to begin filing with the SEC and what documents does it file?

    Beginning with its annual report for fiscal year 2006, TVA is required to file annual reports (10-Ks), quarterly reports (10-Qs), and current reports (8-Ks) with the SEC. However, TVA is not required to register its securities with the SEC.

    Is TVA exempt from any SEC requirements from which Investor-Owned Utilities are not exempt?

    Under the legislation, TVA files periodic reports with the SEC, but, unlike Investor Owned Utilities (IOUs), TVA does not register its securities with the SEC. Accordingly, TVA is not subject to SEC regulations relating to the registration of securities. In addition, TVA is not subject to SEC regulations relating to equity securities, since TVA is not authorized to issue stock.

    Is TVA now subject to the Sarbanes-Oxley Act of 2002?

    Since TVA is not an "issuer" for purposes of the Sarbanes-Oxley Act of 2002 (Act), TVA is technically exempt from many provisions of the Act. By virtue of filing reports on Forms 10-K, 10-Q, and 8-K, TVA is required to comply with certain provisions of the Act, including the requirement that TVA officers certify annual and quarterly reports in accordance with sections 302 and 906 of the Act and that TVA report on the effectiveness of its internal controls over financial reporting in accordance with section 404 of the Act.

    In addition, the legislation requires TVA to comply with the audit requirements of the Act that are incorporated into section 10A of the Securities Exchange Act of 1934 (other than the requirements contained in subsections (m)(1) and (m)(3).

    What did these changes mean for investors?

    The changes made to TVA by the legislation did not affect the features of any TVA bonds and notes held by investors or the provisions of the Basic Tennessee Valley Authority Power Bond Resolution.

    Generally, TVA securities continue to carry the same state and local income tax exemption described in the TVA Act of 1933, as amended.

    Additionally, while TVA had previously provided information to the public, financial information is now available in a form that is more familiar to the investment community. By virtue of filing reports with the SEC, TVA is subject to SEC oversight and enforcement actions. TVA is also subject to a great deal of other oversight. For example, TVA's actions are reviewed by an Inspector General appointed by the President, the Office of Management and Budget, the Government Accountability Office, and Committees of Congress. While the relationship of TVA and these entities was not changed, SEC reporting added an additional layer of oversight.

    For example, instead of publishing an annual Information Statement, TVA now files its Annual Report on Form 10-K with the SEC. In addition, TVA now discloses certain current events on Form 8-K.

    How do I purchase TVA securities?

    TVA securities can be purchased through a broker or other financial intermediary.

    Does the U.S. government guarantee TVA securities?

    TVA bonds and notes are backed solely by the net power proceeds of the TVA power system. They are not obligations of, nor are they guaranteed by, the U.S. government.

    TVA offers a variety of bondholder protections, including the requirement that power bonds and discount notes be given first pledge of payment from net power proceeds, and the requirement that TVA charges electricity rates sufficient to ensure the full payment of annual debt service.

    Are the principal and interest payments on TVA securities tax-exempt?

    Both principal and interest on TVA securities are generally exempt from state and local income taxes. TVA securities are not exempt from estate, inheritance, or gift taxes or from federal income tax.

    Taxes may vary due to individual circumstances. Please consult a tax advisor for specific tax information.

    Are Putable Automatic Rate Reset Securities (PARRS) preferred stock or bonds?

    Although PARRS resemble the structure of preferred stock, they are actually TVA debt securities that pay interest on a quarterly basis. These securities are listed on the New York Stock Exchange under the symbols TVC and TVE for ease of trading. TVA is wholly-owned by the U.S. government and is not authorized to issue stock.

    How does the PARRS rate reset work?

    Both TVC and TVE bonds contain a provision that provides for a possible reduction (never an increase) in the coupon rate under certain conditions every year until maturity, beginning on the date specified in the offering circular and/or supplement. If the coupon rate is reduced, the owner of the bond has the option to put (return) the bond to TVA at par value. Certain dates and procedures must be followed. The instructions for redeeming the bonds with TVA are included in the legal notices attached to the offering circulars.

    Please see the TVA Putable Automatic Rate Reset Bonds on TVA’s Investor Relations website for more information about PARRS bonds.

    How will I be notified if PARRS coupon rates are reset?

    TVA will send a notice of reset to The Depository Trust Company (DTC). Unless you are a direct participant in DTC’s book-entry system, you should make arrangements with the financial institution holding your bonds to send you reset notices.

    TVA may also issue a news release prior to a rate reset and make information available on its website. Additionally, TVA typically sends an e-mail alert to investors when news is available about the PARRS or electronotes®. You can sign up for TVA investor e-mail alerts on TVA’s Investor Relations home page.

    Will TVA notify me if I own a TVA security that is going to be called (redeemed)?

    In most cases, TVA will give a 30-day prior notice of its intent to call a security. Depending on the security, TVA will notify either The Depository Trust Company or the Federal Reserve System. These organizations are responsible for notifying their participating brokers, banks, or financial institutions, and these entities in turn are responsible for notifying individual investors.

    TVA may also issue a news release prior to a call. You can sign up for TVA’s e-mail alert, which automatically sends a notice when a financial news release is posted to the website.

    How are principal and interest payments on TVA bonds made?

    TVA makes principal and interest payments electronically on the date the payment is due (or the first business day following a payment date that occurs on a weekend or holiday) through either the Federal Reserve System or The Depository Trust Company, depending upon which system TVA employed used to issue the securities for which payments are being made.

    These organizations forward payments directly to their participating brokers, banks, or other financial institutions, and these entities in turn forward payments to individual investors.

    Will I receive a certificate representing my investment in TVA securities?

    No. The use of an electronic system for issuance of TVA securities eliminates the need for certificates.

    What is the last day a buyer can purchase TVA securities in order to receive the next interest payment?

    If the bonds have been issued through the book-entry system of the U.S. Federal Reserve Banks, the “holder” must be the owner of record on the business day immediately before the relevant interest payment date. If the bonds have been issued through the book-entry system of The Depository Trust Company, the holder must be the owner of record on the appropriate record date, which is often 15 calendar days before the relevant interest payment date. However, you may be a “beneficial owner” and not be a holder in these systems. Your broker can tell you what time frames apply to beneficial owners.

    NOTE: These questions and answers do not provide all information that may be important when considering TVA securities. Please carefully read the relevant Offering Circulars together with TVA's SEC filings.