Tennessee Valley Authority

There have been no material changes to the environmental matters described in Part I, Item 1, Business —Environmental Matters of the Annual Report, except as described below.

Clean Air Act Programs and Regulations

National Ambient Air Quality Standards. The Clean Air Act requires the Environmental Protection Agency ("EPA") to set National Ambient Air Quality Standards ("NAAQS") for certain air pollutants. Areas meeting a NAAQS are designated as attainment areas. Areas not meeting a NAAQS are designated as non-attainment areas, and more stringent requirements apply in those areas, including stricter controls on industrial facilities and more complicated and public permitting processes. TVA fossil fuel-fired plants can be impacted by these requirements. Currently, all TVA generating units are located in areas designated as attainment areas. On March 6, 2024, however, EPA finalized more stringent NAAQS for particulate matter that may increase the likelihood of certain areas in TVA's service territory being designated as non-attainment areas. TVA could incur significant costs associated with upgrades to facilities if such facilities are in areas that are redesignated as being in non-attainment. See Part 1, Item 1, Business —Environmental Matters —Clean Air Act Programs and Regulations—National Ambient Air Quality Standardsin the Annual Report.

Federal Implementation Plan Addressing Regional Ozone Transport for the 2015 Ozone NAAQS. On March 15, 2023, EPA issued final regulations known as the "Good Neighbor Plan" to reduce NOx emissions from power plants and certain industrial facilities. On June 27, 2024, the U.S. Supreme Court stayed the Good Neighbor Plan. The stay prevents EPA from applying the Good Neighbor Plan in 23 affected states, including Alabama, Kentucky, and Mississippi, pending the disposition of the petition for review. See Part I, Item 1, Business —Environmental Matters —Clean Air Act Programs and Regulations —Federal Implementation Plan Addressing Regional Ozone Transport for the 2015 Ozone NAAQS in the Annual Report.

Mercury and Air Toxics Standards for Electric Utility Units. On May 7, 2024, EPA published a final rule that strengthens and updates the Mercury and Air Toxics Standards (“MATS”) for electric generating units (“EGUs”) to reflect recent developments in control technologies. The rule lowers the emission standard for filterable particulate matter ("PM") from 0.030 lbs/ MMBtu to 0.010 lbs/ MMBtu, with compliance to be demonstrated solely through the use of PM Continuous Emission Monitoring Systems. The rule is subject to legal challenges seeking to stay and overturn the rule. If the challenges are not successful, the rule could require TVA to refurbish existing pollution control equipment at some of its coal-fired units, and the cost of such equipment could be substantial.

GHG Emissions. On May 9, 2024, EPA published a final rule that (1) repeals the Affordable Clean Energy Rule addressing GHG emissions from existing fossil fuel-fired EGUs, (2) establishes guidelines for GHG emissions from existing fossil-fuel fired steam generating EGUs, (3) finalizes revisions to the New Source Performance Standards (“NSPS”) for GHG emissions from new and reconstructed fossil fuel-fired stationary combustion turbine EGUs, and (4) finalizes revisions to the NSPS for GHG emissions from fossil fuel-fired steam generating EGUs that undertake a large modification. The rule is subject to legal challenges seeking to stay and overturn the rule. If the challenges are not successful, TVA would be required to reduce GHG emissions from any coal-fired units that it continues to operate beyond January 1, 2032. The degree of GHG emission reduction would depend on the EGUs' retirement date, and the cost of such reductions would likely be substantial. TVA is still evaluating the potential impact of the rule on its new natural gas-fired EGUs, but the impact would also likely be substantial. Provisions of the rule addressing GHG emissions from base load natural gas-fired EGUs would apply to new combined cycle ("CC") gas plants at which construction commenced after May 23, 2023. Base load CC gas plants subject to the rule would be required by January 1, 2032, to control 90 percent of the GHG emissions, most likely through carbon capture and storage. EPA did not finalize guidelines for GHG emissions from existing fossil fuel-fired stationary combustion turbine EGUs in this rulemaking.

Climate Change

Emissions. Though many of TVA's facilities continue to emit air pollutants, emissions from all TVA-owned and operated units (including small CTs of less than 25 MW) have been reduced from historic peaks. Emissions of nitrogen oxides ("NOx") and sulfur dioxide ("SO 2") began being regulated in 1995 and 1977, respectively. Emissions of NOxand SO 2 have been reduced by 97 percent and 99 percent, respectively, since their initial year of regulation.

Notes

(1) Intensity rates are calculated based on generation from TVA's most recent fiscal year for years indicated and emissions data from the most recent CYs.

(2) Emissions data is consistent with Edison Electric Institute Environmental, Social, Governance and Sustainability Report standards, which are based on metric tons ("MTs"), whereas overall CO 2 emission rates and baseline reductions from historical levels are based on short tons.

For CY 2023, TVA's emissions of carbon dioxide ("CO 2") from its owned and operated units, including purchased power and Renewable Energy Certificate retirement adjustments which reduce the reportable CO 2 emissions, were 49 million tons, resulting in a TVA system average, as delivered, CO 2 emission rate of 625 lbs/MWh. This represents a 58 percent and 53 percent reduction in mass carbon emissions and TVA's carbon emission rate, respectively, from 2005 levels.

While TVA continues down the path of lowering emissions, including GHG emissions, there will be fluctuations in TVA's emission numbers as a result of various factors, including electricity usage in the Tennessee Valley and changes in the power supply mix, as TVA continues to make operational decisions to keep the system reliable and deliver low-cost energy. The achievement of TVA's carbon reduction efforts, and its ability to maintain system reliability during the transition to cleaner forms of energy, is subject to numerous risks. See Forward-Looking Information in this Quarterly Report and Part I, Item 1A, Risk

Factors —Operational Risks— TVA may not be able to meet its carbon reduction aspirations, which may result in additional capital expenditures or higher operating expense in the Annual Report.

Physical Impacts of Climate Change. In the third quarter of 2024, TVA updated its Climate Change Action Plan. The goal of the action planning process is to ensure TVA continues to achieve its mission and program goals and to operate in a secure, effective, and efficient manner in a changing climate by integrating climate change adaptation efforts in coordination with state and local partners, tribal governments, and private stakeholders. See Part I, Item 1, Business —Environmental Matters —Climate Change —Physical Impacts of Climate Change in the Annual Report.

Water Quality Control Developments

Steam-Electric Effluent Guidelines. On January 8, 2021, TVA submitted requests to state regulatory authorities to modify National Pollutant Discharge Elimination System permits for Kingston, Cumberland, Bull Run, Shawnee Fossil Plant, and Gallatin to incorporate into the permits limitations in EPA's 2020 Effluent Limitation Guidelines rule. TDEC issued a final permit for Cumberland in the first quarter of 2024. See Part I, Item 1, Business —Environmental Matters —Water Quality Control Developments —Steam-Electric Effluent Guidelines in the Annual Report.

On May 9, 2024, EPA published a final rule that establishes more stringent technology-based effluent limitations for four waste streams: flue gas desulfurization wastewater, bottom ash transport water, combustion residual leachate, and legacy wastewater. The rule is subject to legal challenges seeking to overturn the rule. If the challenges are not successful, TVA could incur substantial costs to comply with the rule.

Cleanup of Solid and Hazardous Wastes

Coal Combustion Residuals. In August 2015, TDEC issued an order that includes an iterative process through which TVA and TDEC will investigate, assess, and remediate any unacceptable risks resulting from CCR management and disposal. As part of this process, TVA has submitted EARs to TDEC, and after the EARs are approved, TVA will submit CARA Plans that will identify the unacceptable risks and TVA's proposed remediation. TDEC will review the CARA Plans and provide comments, and TVA will make revisions to address TDEC's comments until TDEC approves a final CARA Plan for each site. The public also will have an opportunity to review and comment on each CARA Plan prior to TDEC's approval of the final plan. TDEC approved the EARs for John Sevier Fossil Plant ("John Sevier") and Cumberland in the first quarter of 2024 and approved the EARs for Kingston, Allen Fossil Plant, and Watts Bar Fossil Plant in the third quarter of 2024. TVA submitted the initial draft of the John Sevier CARA Plan to TDEC in the first quarter of 2024 and submitted the initial draft of the Cumberland CARA Plan to TDEC in the second quarter of 2024. See Part I, Item 1, Business —Environmental Matters —Cleanup of Solid and Hazardous Wastes —Coal Combustion Residuals in the Annual Report.

On May 8, 2024, EPA published its Legacy CCR Rule, which expands the scope of the existing regulatory requirements of the 2015 CCR Rule to include two additional classes of CCR units: Legacy SIs and CCRMUs. Legacy SIs include inactive surface impoundments at retired generating facilities that were exempt from the 2015 CCR Rule. CCRMUs are a newly defined category that includes previously unregulated areas at CCR facilities where CCR was beneficially reused in an unencapsulated manner, disposed, placed, or managed on land outside of CCR units regulated by the 2015 CCR Rule. For Legacy SIs, TVA must complete associated applicability reports by November 8, 2024. For CCRMUs, TVA must complete the initial round of facility evaluation reports by February 8, 2026, and the subsequent round by February 8, 2027. As a result of the enactment of the final rule, TVA recorded additional estimated AROs and regulatory assets of $3.1 billion during the three months ended June 30, 2024, in order to comply with the requirements related to these two additional classes of CCR units. These amounts are forward-looking and are subject to various uncertainties, and actual amounts may differ materially based upon a number of factors, including, but not limited to, the outcome of legal challenges to the Legacy CCR Rule, ongoing evaluations of the number and scope of newly regulated units, and determinations on final closure requirements and performance standards. See Forward-Looking Information in this Quarterly Report and Part I, Item 1A, Risk Factors in the Annual Report for a discussion of additional factors. Revisions to the additional estimated non-nuclear AROs from the Legacy CCR Rule will be made whenever factors indicate that the timing or amounts of estimated cash flows have changed. See also Note 11 —Asset Retirement Obligations.