Tennessee Valley Authority

There have been no material changes to the key initiatives and challenges described in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges of the Annual Report, except as described below.

Optimum Energy Portfolio

TVA has partnered with the University of Tennessee Baker School for Public Policy and Public Affairs and with diverse stakeholders from across the Tennessee Valley to conduct a Valley Pathways Study, focused on building a competitive and clean economy for the Tennessee Valley. This study examines potential scenarios for all economic sectors across the Tennessee Valley that will support sustainable growth and decarbonization pathways. The preliminary findings from the Valley Pathways Study were released in February 2024. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Optimum Energy Portfolioin the Annual Report.

In the third quarter of 2024, TVA issued a request for proposal ("RFP") for capacity for terms through December 2029. TVA is currently evaluating proposals related to the RFP.

Coal-Fired Fleet. In 2023, TVA made available to the public a draft EIS to assess the impacts associated with the potential retirement of Kingston and the construction and operation of facilities to replace that generation. The final EIS was published in February 2024, and TVA documented its final decision with the Record of Decision on April 2, 2024. TVA plans to retire the nine coal-fired units at Kingston by the end of CY 2027 and replace the retired generation with an energy complex that includes at least 1,500 MW of natural gas, 100 MW of battery storage, and 3-4 MW of solar. As of June 30, 2024, TVA had spent $378 million on long lead time equipment in connection with this planned project. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Coal-Fired Fleetin the Annual Report.

Natural Gas-Fired Units. As TVA continues to evaluate the impact of retiring its coal-fired fleet by 2035 and works to

accelerate the growth of renewables, it also continues to evaluate adding flexible lower carbon-emitting gas plants as a strategy

to maintain reliability. Pre-commercial plant operations began on Paradise CTs 5-7 in the first quarter of 2024, and the units became operational on December 29, 2023, with a total summer net capability of 681 MW. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Natural Gas-Fired Unitsin the Annual Report. In addition, Allen CTs 1-16, which accounted for 195 MW of summer net capability at September 30, 2023, were retired in December 2023. TVA is continuing to explore a 200 MW aeroderivative combustion turbine project at the Allen site and as of June 30, 2024, had spent $178 million on this project. TVA is also exploring a 500 MW simple cycle CT project at TVA's Caledonia site, and the draft EIS was made available for public comment in July 2024.

TVA is replacing generation for one unit at Cumberland with a 1,450 MW combined cycle plant that is expected to be operational by CY 2026. As of June 30, 2024, TVA had spent $743 million on this project. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Natural Gas-Fired Unitsin the Annual Report.

Renewable Power Purchase Agreements. TVA issued a carbon-free RFP in July 2022, and during the nine months ended June 30, 2024, TVA signed five power purchase agreements totaling nearly 800 MW of solar generation and 20 MW of battery storage capacity from the carbon-free RFP that are expected to come online by the end of CY 2028. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Renewable Power Purchase Agreementsin the Annual Report.

Nuclear Fleet License Extensions. Subject to the completion of all appropriate environmental reviews, TVA is seeking to renew all nuclear generation units' licenses for an additional 20 years. The first license renewal application was submitted to the Nuclear Regulatory Commission in January 2024 for the three units at Browns Ferry Nuclear Plant following the completion of a Supplemental EIS prepared by TVA to assess the environmental impacts associated with renewing the Browns Ferry Nuclear Plant licenses. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Nuclear Fleet License Extensionsin the Annual Report.

Automated Energy Exchange Platform. In July 2023, the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") remanded the Federal Energy Regulatory Commission's ("FERC") approval of the Southeast Energy Exchange Market ("SEEM"), sending the matter back to FERC for additional proceedings. On December 17, 2023, the petitioners filed another appeal on the theory that FERC's failure to act promptly after the D.C. Circuit's remand created a new appealable event. On June 14, 2024, in response to the D.C. Circuit's remand directives, FERC issued an order directing the parties to submit briefs to supplement the record on the issues of whether SEEM is a loose power pool and whether SEEM's geographic requirement violates the open access principles of FERC Order No. 888. The SEEM market is continuing to transact pending the disposition of the legal challenges. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Automated Energy Exchange Platformin the Annual Report.

Coal Combustion Residuals

TVA is pursuing a programmatic approach to address environmental impacts related to the previous storage and disposal of its CCR in accordance with applicable law (“CCR Program”). Under the CCR Program, TVA performed stability remediation of all at-risk facilities, completed the conversion of all operational coal-fired plants to dry CCR storage, and ceased operation of wet CCR storage facilities.

As of June 30, 2024, TVA had spent approximately $3.1 billion on its CCR Program. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations— Key Initiatives and Challenges — Coal Combustion Residualsin the Annual Report.

TVA was involved in two lawsuits concerning the CCR facilities at Gallatin Fossil Plant ("Gallatin"). One case was resolved by the entry of a consent order, under which TVA agreed to close the existing ash facility by removal, either to an on-site landfill or to an offsite facility. The removal plan and the Environmental Assessment Report ("EAR") were approved by Tennessee Department of Environment and Conservation ("TDEC") in 2023. TVA submitted the Gallatin Corrective Action/Risk Assessment ("CARA") Plan to TDEC in January 2024.

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 units: Legacy SIs and CCRMUs. 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. See also Note 11 —Asset Retirement Obligations.

Corporate Governance

In December 2023, the TVA Board approved a revised committee structure under which the responsibilities of the Audit, Finance, Risk, and Cybersecurity Committee were separated into two new committees: the Audit, Risk, and Cybersecurity Committee and the Finance, Rates, and Portfolio Committee. In addition, in 2024, the Board approved membership changes to the committees, and the current members of the committees are as follows: Audit, Risk, and Cybersecurity Committee members are L. Michelle Moore (Chair), Beth P. Geer, and William J. Renick; Finance, Rates, and Portfolio Committee members are A. Wade White (Chair), Brian Noland, William J. Renick, and Joe H. Ritch; External Stakeholders and Regulation Committee members are Beth Harwell (Chair), Beth P. Geer, and William J. Renick; Operations and Nuclear Oversight Committee members are Robert P. Klein (Chair), L. Michelle Moore, and A. Wade White; and People and Governance Committee members are Brian Noland (Chair), Beth Harwell, Robert P. Klein, and Joe H. Ritch.

The term of William B. Kilbride as member of the TVA Board ended January 3, 2024, with the adjournment of the most recent session of Congress. Although his term of office expired May 18, 2023, the TVA Act permitted him to continue to serve as Director until the end of this session of Congress.